9 States That Still Tax Social Security Benefits in 2025
The Movement to Reduce State Taxes on Social Security Benefits
Millions of Americans rely on Social Security benefits as a crucial source of income during their retirement years. However, federal and state tax laws can significantly impact the amount of money retirees actually receive. In 2025, nine states still tax Social Security benefits, but there is a growing movement to reduce or eliminate these taxes to ensure that retirees can fully enjoy the benefits they have earned.
President Donald Trump campaigned on a promise to end federal taxes on Social Security benefits, but this initiative would require congressional approval. In the meantime, states have the authority to set their own tax policies, and some are taking steps to reduce the tax burden on retirees. West Virginia, for example, is in the process of phasing out its tax on Social Security benefits, and lawmakers in other states are exploring similar measures.
The movement to reduce state taxes on Social Security benefits is gaining momentum, with critics arguing that these taxes unfairly diminish the financial security of older adults. Many retirees are already facing challenges due to high inflation and rising living costs, prompting some to consider returning to work just to make ends meet.
Several states have recently taken action to alleviate the tax burden on Social Security beneficiaries. Kansas and West Virginia passed laws in the past year to eliminate or phase out taxes on Social Security benefits. Despite these positive developments, there are still nine states where Social Security benefits are subject to state taxes in 2025.
States Where Social Security Benefits are Taxed
Colorado
In Colorado, only some Social Security recipients are required to pay state taxes on their benefits. Individuals aged 65 and older can deduct Social Security for state tax purposes, and taxpayers between 55 and 64 may also be eligible for deductions based on income thresholds.
Connecticut
Retirees in Connecticut pay state taxes on Social Security benefits if their adjusted gross income exceeds certain thresholds. However, a significant portion of benefits are exempt from state taxes, providing some relief to retirees.
Minnesota
Married couples filing jointly in Minnesota can avoid taxes on Social Security benefits if their income falls below a certain threshold. Lawmakers in the state are considering a bill that would eliminate all taxation of benefits to provide further support for retirees.
Montana
In Montana, taxpayers with incomes above specific thresholds are subject to state taxes on Social Security benefits. Previous attempts to end this taxation have been unsuccessful, leaving some retirees with a tax burden on their benefits.
New Mexico
Most New Mexico taxpayers are exempt from state taxes on Social Security benefits, thanks to legislation passed in 2022. However, retirees with higher incomes may still be subject to income tax on their benefits, depending on their earnings.
Rhode Island
Residents of Rhode Island can avoid taxes on Social Security benefits if they have reached full retirement age and their income is below a certain threshold. This provides relief for retirees in the state who rely on Social Security as a significant source of income.
Retirees in Vermont, Utah, and West Virginia may be subject to income taxes on their Social Security benefits, depending on their income levels. In Vermont, individuals earning over $50,000 and couples over $65,000 are taxed on their benefits. A group of lawmakers is advocating for higher income thresholds to exempt more retirees from this tax.
In Utah, households earning over $90,000 are still taxed on Social Security benefits at a rate of 4.55%. Governor Spencer Cox had proposed eliminating this tax entirely, but the legislature only increased the income threshold to $90,000, making progress towards the governor’s goal.
On the other hand, West Virginia is phasing out taxes on Social Security benefits, with higher-earning beneficiaries already seeing a 65% reduction in these taxes. The state plans to eliminate these taxes completely by 2026.
These tax policies impact retirees differently in each state, with some facing higher tax burdens on their benefits than others. It is essential for retirees to stay informed about these tax laws and any proposed changes that may affect their retirement income.
