Most states don't tax Social Security benefits, but nine still do in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Many offer income-based exemptions that shield most retirees from these taxes.
Understanding which states tax Social Security becomes increasingly important as you approach retirement. While the federal government may tax up to 85% of your benefits depending on your income, state-level taxation adds another layer of complexity to retirement planning.
The landscape of Social Security taxation at the state level continues to evolve. In 2024 alone, Missouri, Kansas, and Nebraska eliminated their taxes on Social Security benefits. West Virginia has begun phasing out its tax and will completely eliminate it by 2026, reducing the list from 11 states to just eight by next year.
Understanding Federal Taxation First
Before examining state taxes, it's crucial to understand federal taxation rules. The Social Security Administration uses a "combined income" formula to determine whether your benefits face taxation.
Combined Income Calculation
Combined Income = Adjusted Gross Income + Nontaxable Interest + ½ of Social Security Benefits
Federal Tax Thresholds
Single Filers
- Under $25,000: No federal tax on benefits
- $25,000 - $34,000: Up to 50% of benefits may be taxed
- Over $34,000: Up to 85% of benefits may be taxed
Married Filing Jointly
- Under $32,000: No federal tax on benefits
- $32,000 - $44,000: Up to 50% of benefits may be taxed
- Over $44,000: Up to 85% of benefits may be taxed
Note: These percentages represent the portion of benefits subject to taxation, not the actual tax rate. Your actual tax liability depends on your overall income and tax bracket.
New Federal Tax Relief for Seniors (2025-2028)
The 2025 tax law introduced temporary relief for seniors. Taxpayers age 65 and older can claim a $6,000 deduction for tax years 2025 through 2028. This deduction phases out by 6% for each dollar of AGI exceeding $75,000 for individuals or $150,000 for joint filers.
According to the White House Council of Economic Advisors, this new deduction means only about 12% of seniors will pay federal taxes on their Social Security benefits during this period, down from approximately 40% previously.
The 9 States That Tax Social Security in 2025
Each state that taxes Social Security has different rules, exemptions, and thresholds. Most provide income-based exemptions that protect lower and middle-income retirees from taxation.
2025 State-by-State Social Security Tax Comparison
| State | Tax Rate Range | Single Filer Threshold | Joint Filer Threshold | Age Requirements | Exemption Type |
|---|---|---|---|---|---|
| Colorado | 4.4% flat | $75,000 (age 55-64) Full exempt 65+ | $95,000 (age 55-64) Full exempt 65+ | 55+ (starting 2025) | Income-based deduction |
| Connecticut | 2% - 6.99% | $75,000 | $100,000 | None | Income-based exemption (max 25% taxed) |
| Minnesota | 5.35% - 9.85% | $84,490 | $108,320 | None | Full subtraction below threshold |
| Montana | 4.7% - 5.9% | N/A | N/A | General retirement deduction varies by age | Up to $5,630 (under 65) or $6,130 (65+) |
| New Mexico | 1.7% - 5.9% | $100,000 | $150,000 | None | Full exemption below threshold |
| Rhode Island | 3.75% - 5.99% | $107,000 | $133,750 | Full retirement age | Full exemption below threshold at FRA |
| Utah | 4.55% flat | Varies | Varies | None | Tax credit (income-based) |
| Vermont | 3.35% - 8.75% | $50,000 | $65,000 | None | Full exemption below threshold |
| West Virginia | 2.36% - 5.12% | 65% deduction (2025) 100% exempt starting 2026 | None | Phased deduction → full exemption 2026 | |
Colorado
4.4% flatFull exempt 65+
Full exempt 65+
Connecticut
2% - 6.99%Minnesota
5.35% - 9.85%Montana
4.7% - 5.9%New Mexico
1.7% - 5.9%Rhode Island
3.75% - 5.99%Utah
4.55% flatVermont
3.35% - 8.75%West Virginia
2.36% - 5.12% Phasing OutSources: Tax Foundation, Kiplinger, Bankrate, Individual State Tax Authority Websites
Detailed State-by-State Breakdown
Colorado
4.4% flat rateColorado's flat income tax rate of 4.4% applies to Social Security benefits, but significant exemptions exist. Taxpayers age 65 and older can deduct all federally taxed Social Security benefits from their state income.
Exemptions
- Age 65+: Full deduction of all federally taxed Social Security
- Age 55-64 (starting 2025): Full deduction if AGI ≤ $75,000 (single) or $95,000 (joint)
- Above thresholds: Up to $20,000 deduction available
Connecticut
2% - 6.99%Connecticut exempts most retirees from paying state taxes on Social Security through generous income thresholds.
Exemptions
- Single/MFS: No tax if AGI < $75,000
- Joint/HOH: No tax if AGI < $100,000
- Above thresholds: Maximum 25% of benefits taxed
Minnesota
5.35% - 9.85%Minnesota provides substantial relief for lower-income retirees through its Social Security subtraction, despite having among the highest state income tax rates.
2025 Income Thresholds
- Married Joint: Full subtraction if AGI < $108,320
- Single/HOH: Full subtraction if AGI < $84,490
- Phase-out: Reduces 10% per $4,000 above thresholds
Montana
4.7% - 5.9%Montana taxes Social Security benefits at rates ranging from 4.7% to 5.9%. The state doesn't offer specific Social Security exemptions but allows general retirement income deductions.
Retirement Income Deduction
- Under 65: Up to $5,630 (2025 amount)
- Age 65+: Up to $6,130 (2025 amount)
New Mexico
1.7% - 5.9%New Mexico provides generous exemptions that protect most retirees from state taxation of Social Security.
Income Exemptions
- Single filers: No tax if income < $100,000
- Joint filers: No tax if income < $150,000
These high thresholds effectively shield the vast majority of New Mexico retirees from any state-level Social Security taxation.
Rhode Island
3.75% - 5.99%Rhode Island exempts Social Security benefits for retirees who have reached full retirement age and meet income requirements.
Full Retirement Age Exemptions
- Joint filers: No tax if AGI < $133,750
- Other statuses: No tax if AGI < $107,000
Utah
4.55% flat rateUtah imposes a flat 4.55% income tax on Social Security benefits, though a tax credit exists that can completely offset the tax for lower-income households.
Social Security Credit
Utah offers a Social Security Credit that varies based on income and household size. Use the Social Security Credit Worksheet (TC-40S) to determine eligibility.
Potential Change: Governor Spencer Cox has advocated for eliminating all taxation of Social Security benefits, citing potential annual savings of nearly $1,000 per household. The issue remains under active discussion in the state legislature.
Vermont
3.35% - 8.75%Vermont's income tax rates range from 3.35% to 8.75%. The state exempts Social Security benefits for retirees meeting specific income thresholds.
Income Exemptions
- Joint filers: Full exemption if AGI ≤ $65,000
- Other statuses: Full exemption if AGI ≤ $50,000
- Above thresholds: Graduated phase-out applies
West Virginia
2.36% - 5.12% Phasing OutWest Virginia is actively phasing out its tax on Social Security benefits through a multi-year plan.
Phase-Out Schedule
- 2025 Tax Year: 65% of benefits can be subtracted from AGI
- 2026 and Beyond: 100% exemption (complete elimination)
Once the phase-out completes in 2026, West Virginia retirees will see meaningful tax savings on their Social Security income.
41 States That Don't Tax Social Security
The remaining 41 states and the District of Columbia don't tax Social Security benefits. This includes nine states with no income tax at all, plus 32 states that specifically exempt Social Security from taxation.
States With No Income Tax
- Alaska
- Florida
- Nevada
- New Hampshire*
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
*New Hampshire has no tax on earned income but previously taxed investment income (eliminated 2024)
States With Income Tax But Exempt Social Security
- Alabama
- Arizona
- Arkansas
- California
- Delaware
- District of Columbia
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Missouri
- Nebraska
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- Virginia
- Wisconsin
States That Recently Eliminated Social Security Taxes
The trend clearly moves toward eliminating state-level taxation of Social Security. Several states have recently acted to provide tax relief for retirees.
Missouri
Completely eliminated taxation of Social Security benefits, saving retirees approximately $309 million annually.
Kansas
Signed legislation eliminating all state taxation of Social Security benefits starting in the 2024 tax year.
Nebraska
Eliminated taxation of Social Security benefits, providing approximately $17 million in annual savings to retirees.
North Dakota
Eliminated taxation of Social Security benefits as part of broader tax reform.
This accelerating pattern suggests additional states may follow suit in the coming years, particularly as states compete to attract and retain retirees.
Should You Relocate to Avoid Social Security Taxes?
Moving to one of the 41 states that don't tax Social Security can eliminate state-level taxation on your benefits. However, relocation involves more than just Social Security tax considerations.
Calculate Your Potential Savings
Determine your actual state tax liability on Social Security. If you're in Connecticut earning $90,000 AGI with $30,000 in benefits, you might pay approximately $450 annually in state taxes. Over 20 years of retirement, that's $9,000—but is that enough to justify relocating?
Consider Total Tax Burden
Some states without income tax compensate through higher property or sales taxes. Texas and New Hampshire have relatively high property tax rates. Compare your total tax burden across states, not just income tax on Social Security.
Evaluate Cost of Living Differences
Housing costs, healthcare expenses, and general cost of living vary dramatically by region. Saving $1,000 annually on Social Security taxes means little if housing costs $500 more per month.
Factor in Quality of Life
Climate preferences, proximity to family, healthcare quality, cultural amenities, and social connections all matter in retirement. Financial considerations should align with, not override, lifestyle preferences.
Simple Break-Even Analysis
- Calculate annual state tax on your Social Security benefits in your current state
- Multiply by expected years in retirement (e.g., 20-25 years)
- Compare to one-time moving costs plus annual cost-of-living differences
- If total savings exceed total additional costs by a comfortable margin, relocation may make financial sense
Remember: You can't put a price on being near family or living in a community you love. Financial optimization should support, not dictate, retirement location decisions.
Strategies to Minimize Social Security Taxes
Whether you live in a state that taxes Social Security or not, several approaches can help reduce your federal tax burden on benefits.
Manage Taxable Income
Keep your combined income below the thresholds that trigger taxation. This might involve timing retirement account withdrawals strategically or considering Roth conversions before claiming benefits.
Consider Roth Conversions
Converting traditional IRA funds to Roth IRAs before retirement can reduce future required minimum distributions. Qualified withdrawals from Roth accounts don't count toward combined income calculations.
Utilize Health Savings Accounts
HSAs offer triple tax benefits and can help manage retirement healthcare costs without increasing taxable income. Qualified medical expense withdrawals don't affect Social Security taxation calculations.
Time Your Social Security Claim
Delaying Social Security increases your monthly benefit amount. If you have other income sources to draw from initially, this strategy can result in higher lifetime benefits and potentially lower taxation percentages.
Charitable Giving Strategies
Qualified charitable distributions from IRAs (age 70½+) satisfy required minimum distributions while reducing adjusted gross income, potentially keeping you below Social Security taxation thresholds.
Frequently Asked Questions
Do any states not tax Social Security at all?
Yes, 41 states plus the District of Columbia don't tax Social Security benefits. Nine states have no income tax whatsoever (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire), while 32 other states with income taxes specifically exempt Social Security from taxation.
Will West Virginia still tax Social Security in 2026?
No. West Virginia is phasing out its Social Security tax and will completely eliminate it starting in 2026. For the 2025 tax year, taxpayers can subtract 65% of their benefits, which increases to 100% in 2026.
Can I avoid state taxes on Social Security by moving?
Moving to one of the 41 states that don't tax Social Security can eliminate state-level taxation on your benefits. However, consider all tax factors including property taxes, sales taxes, and overall cost of living before relocating. Some states without income taxes compensate through higher property or sales taxes.
How does the new $6,000 senior deduction work?
For tax years 2025-2028, taxpayers age 65 and older can claim a $6,000 deduction that reduces taxable income. This deduction phases out by 6% for each dollar of AGI exceeding $75,000 for individuals or $150,000 for joint filers. According to federal analysis, this change means only about 12% of seniors will pay federal taxes on Social Security.
Are Social Security disability benefits taxed by states?
Social Security disability insurance (SSDI) benefits follow the same state taxation rules as retirement benefits. In the nine states that tax Social Security, disability benefits are generally treated identically to retirement benefits, though some states may have different thresholds or exemptions.
Which state has the highest tax rate on Social Security?
Minnesota and Vermont tend to have the highest tax rates, with Minnesota's rates ranging from 5.35% to 9.85% and Vermont's from 3.35% to 8.75%. However, both states offer income-based exemptions that protect many lower and middle-income retirees from taxation.
Do I need to pay estimated taxes on my Social Security benefits?
You can elect to have federal income tax withheld from your Social Security benefits to avoid surprise tax bills. Complete Form W-4V (Voluntary Withholding Request) to withhold 7%, 10%, 12%, or 22% from your monthly benefit. For state taxes, contact your state tax authority for withholding options.
What happens if I split time between multiple states?
Part-year residency creates complex tax situations. Generally, you're taxed based on your state of legal domicile, not where you physically spend time. Establishing domicile requires demonstrating intent through factors like driver's license, voter registration, and where you spend the majority of the year. Consult a tax professional familiar with multi-state taxation.
Planning Your Retirement Tax Strategy
Retirement planning requires understanding how both federal and state taxes will affect your Social Security income. The location you choose for retirement will affect your finances for decades.
Consider your entire financial picture, including retirement account balances, pension income, investment portfolios, and expected Social Security benefits. This comprehensive view allows for better planning around the timing of income sources.
Tax rules change regularly. Staying informed about both federal and state-level developments ensures you can adapt your strategy as new opportunities or requirements emerge. Annual reviews with a tax professional can identify planning opportunities specific to your situation.
Get Expert Guidance on Your Retirement Tax Strategy
At Bogart Wealth, our advisors help clients navigate the complex intersection of federal and state tax rules affecting retirement income. We develop comprehensive strategies tailored to your specific circumstances, helping you make informed decisions about retirement location, income timing, and tax minimization.
Schedule a Consultation
