Pay attention because 2025 is going to be a curveball. Social Security represents more than just an income for many millions of retirees across the United States, it is the guarantee that they will be able to live with dignity and peace of mind after years of hard work, but, depending on where you live, this support can be reduced by state taxes.
By 2025, only nine states will maintain taxes on Social Security benefits, so residents of these states will see their pockets directly affected.
We will explain here what to expect from this change and how can impact you.
Which states tax Social Security benefits?
Although Missouri and Kansas have already opted to stop taxing benefits (joining the 41 US states that will not do so), there are still nine states that will continue to do so.
- Colorado: those with an adjusted gross income of less than $75,000 (single) or $95,000 (couple) will be able to fully deduct the benefits taxed at the federal level, thus providing a small relief for users with moderate salaries. However, if you exceed these amounts you will have to pay your taxes as usual.
- Connecticut: In this case, retirees with less than $75,000 (single) or less than $100,000 (couple) will be exempt from taxes. This is intended to help those people who have less economic capacity.
- Montana: You will have stricter restrictions that will only apply to those with an income below $25,000 (if single) and $32,000 (if coupled) which leaves many retirees with additional pensions in the taxable category.
- Road Island: Incomes under $88,950 for singles and $111,200 for couples will be exempt. This will be a relief for most retired residents.
- Utah: Those who earn less than $30,000 (individual) or $50,000 as a couple will be exempt.
- Vermont: Exemption limits are $50,000 for singles and $65,000 for couples, affecting a sizable portion of retirees.
- Minnesota: If you earn less than $82,190 (single) or $105,380 (couple) forget about taxing Social Security benefits.
- West Virginia: While still in the process of phasing out these taxes, benefits will be taxed at only 35%, with full exemption projected for 2026.
- New Mexico: Exempts singles with incomes under $100,000 and couples earning up to $150,000.
Relevant information:
- Why do some states tax Social Security benefits? These taxes seek to generate revenue to balance state budgets.
- How can you minimize the impact of these taxes? Options include moving to states without Social Security taxes or planning income within exemption limits.
- Which states are most favourable to retirees? States like Florida and Texas, which do not tax Social Security
Table about this changes
| State | Single Income Exemption | Married Income Exemption | Special Notes |
| Colorado | $75,000 | $95,000 | Full deduction for federally taxed benefits below the income limits. |
| Connecticut | $75,000 | $100,000 | Sliding scale exemptions to relieve low-income retirees. |
| Minnesota | $82,190 | $105,380 | No taxes on Social Security benefits below these income thresholds. |
| Montana | $25,000 | $32,000 | Strict limits leaving many retirees subject to taxation. |
| Rhode Island | $88,950 | $111,200 | Generous exemptions for most retirees in the state. |
| Utah | $30,000 | $50,000 | Low thresholds mean many retirees remain taxed. |
| Vermont | $50,000 | $65,000 | Significant portion of retirees impacted by low exemption thresholds. |
| West Virginia | Gradual reduction | Gradual reduction | Taxes reduced by 65% in 2025; full exemption expected by 2026. |
| New Mexico | $100,000 | $150,000 | Generous income limits provide relief for most retirees. |
How can I calculate the impact of taxes on net income?
Don’t worry, it’s much easier than it seems! First, add up your total income for the year (including other income such as pensions or investments). Then, check if your state has exemptions and what the limit is. If you exceed that limit, apply your state’s tax rate to the part of your income that exceeds the threshold. The result will give you a clear idea of how much these taxes will impact your pocket.