Social Security – In 2025, many states across the U.S. will no longer tax Social Security benefits, following a trend set by Missouri and Kansas, which stopped taxing Social Security in 2024. However, there are still nine states that will continue taxing these benefits in 2025. Here’s a look at how various states handle Social Security taxes for their residents:
Colorado – In Colorado, Social Security benefits will remain taxable in 2025. However, there is an exemption for individuals aged 55 to 64 who have an adjusted gross income (AGI) of $75,000 or less (or $95,000 for couples filing jointly). These individuals can fully deduct their federally taxed Social Security benefits when filing taxes.
Connecticut – Connecticut provides a similar exemption policy to Colorado. Single filers (or married individuals filing separately) with an AGI under $75,000 will not be taxed on their Social Security benefits. Married couples filing jointly with an AGI under $100,000 also qualify for this exemption.
Minnesota – Minnesota exempts Social Security benefits from state taxes for married filers with an AGI under $105,380 and individuals with an AGI under $82,190.
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Montana – In Montana, all Social Security benefits are exempt from taxation for single filers with an AGI under $25,000 and joint filers with an AGI under $32,000.
New Mexico – New Mexico has eliminated taxes on Social Security benefits for individuals earning less than $100,000 annually and for married couples with an AGI under $150,000.
Rhode Island – Rhode Island exempts individuals with an AGI below $88,950 from paying state taxes on their Social Security benefits. Married couples with an AGI under $111,200 also qualify for this exemption.
Utah – In Utah, Social Security benefits are exempt from taxation for single individuals making less than $30,000 a year and married couples earning less than $50,000 annually.
Vermont – Vermont provides an exemption from Social Security taxes for individuals with an income under $50,000 and married couples earning less than $65,000 per year.
West Virginia – West Virginia has enacted a phased approach to eliminating state taxes on Social Security benefits. For now, individuals earning less than $50,000 and married couples making less than $100,000 are exempt from the tax. The state’s new law will reduce Social Security tax by 35% in 2024, 65% in 2025, and fully eliminate it by 2026.
These state policies will help many retirees keep more of their Social Security benefits, but it’s important to verify the specific tax laws for your state or the state where you plan to retire.
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