Kim
Social Security serves as a financial lifeline for millions of American seniors. In fact, a recent Gallup poll found that 6 in 10 retirees depend on it as a major source of income. With such a significant reliance, it’s crucial that retirees keep as much of their benefits as possible.
However, for those living in nine specific U.S. states, a portion of their monthly Social Security checks may be taxed, reducing their income at a time when every dollar counts.
This article outlines which states still tax SSA benefits, how those taxes work, and what retirees need to do to minimize their losses.
Understanding Federal Social Security Taxation
Before diving into the state-level tax situation, it’s important to understand how the federal government taxes Social Security.
The IRS uses a measure called “combined income” to determine if benefits are taxable:
- Combined income = Adjusted Gross Income (AGI) + nontaxable interest + ½ of your Social Security benefits
Here’s how much of your Social Security benefits may be taxed at the federal level:
| Taxable Portion of Benefits | Individual Combined Income | Joint Combined Income |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | $25,000 – $34,000 | $32,000 – $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Because these thresholds haven’t changed in over 30 years, more retirees fall into taxable territory each year — especially as benefit amounts increase with inflation.
The 9 U.S. States That Tax Social Security Benefits
While many states have eliminated taxes on Social Security (like Kansas, Missouri, and Nebraska), these 9 states still tax some or all benefits, depending on income:
1. Colorado
- Exemption: Full exemption if AGI is under $75,000 (single) or $95,000 (joint)
- Partial Deduction: Up to $20,000 for under 65
- Tax Rate: 4.4%
2. Connecticut
- Exemption: Under $75,000 (single) or $100,000 (joint)
- Partial Taxation: Up to 25% of benefits taxed above threshold
- Tax Rate: 4.5% – 6.99%
3. Minnesota
- Exemption: Under $84,490 (single) or $108,320 (joint)
- Phase-out: 10% more taxed for each $4,000 above threshold
- Tax Rate: 6.8% – 9.85%
4. Montana
- Taxable: If included in federal income
- Deduction: $5,660 for seniors 65+
- Tax Rate: 4.7% – 5.9%
5. New Mexico
- Exemption: AGI under $100,000 (single) or $150,000 (joint)
- Full Taxation: Above threshold
- Tax Rate: 4.9% – 5.9%
6. Rhode Island
- Exemption: Under $104,200 (single) or $130,250 (joint)
- Tax Rate: 4.75% – 5.99%
7. Utah
- Full Taxation: All federally taxed SSA is also taxed
- Credit: Offset for AGI under $45,000 (single) or $75,000 (joint)
- Tax Rate: 4.55%
8. Vermont
- Exemption: AGI under $50,000 (single) or $65,000 (joint)
- Partial: $10,000 above threshold gets partial deduction
- Tax Rate: 3.35% – 8.75%
9. West Virginia
- Exemption: AGI under $50,000 (single) or $100,000 (joint)
- Partial Taxation: 35% of benefits taxed above threshold
- Tax Rate: 4.44% – 4.82%
- Note: No Social Security tax after 2025
State Taxes on SSA Benefits
| State | Exemption Threshold (Single/Joint) | Tax Rate Range | Future Changes |
|---|---|---|---|
| Colorado | $75K / $95K | 4.4% | No changes planned |
| Connecticut | $75K / $100K | 4.5% – 6.99% | No changes planned |
| Minnesota | $84,490 / $108,320 | 6.8% – 9.85% | No changes planned |
| Montana | N/A (based on federal inclusion) | 4.7% – 5.9% | No changes planned |
| New Mexico | $100K / $150K | 4.9% – 5.9% | No changes planned |
| Rhode Island | $104,200 / $130,250 | 4.75% – 5.99% | No changes planned |
| Utah | $45K / $75K | 4.55% | Tax credit available |
| Vermont | $50K / $65K | 3.35% – 8.75% | No changes planned |
| West Virginia | $50K / $100K | 4.44% – 4.82% | Eliminated starting 2026 |
Planning Beyond Taxes
While taxes can reduce your Social Security income, retirement planning shouldn’t be based solely on state tax policy. Important factors include:
- Cost of living
- Access to healthcare
- Proximity to family and friends
- Lifestyle preferences
Moreover, with state tax laws changing frequently, you could outlive the current tax structure. For instance, West Virginia will stop taxing SSA benefits in 2026, and other states may follow.
How to Reduce Social Security Taxes
You can potentially avoid or reduce Social Security taxation by:
- Converting Traditional IRAs to Roth IRAs before claiming benefits
- Spreading retirement withdrawals to avoid spiking AGI
- Working with a tax planner to keep combined income below key thresholds
Retirees in nine U.S. states could see their Social Security checks shrink due to state-level taxation.
Understanding these rules can help you plan smarter, reduce your tax burden, and make informed decisions about where to retire. Review your state’s policies and explore strategies to protect your retirement income.
FAQs
Which U.S. states still tax Social Security benefits in 2025?
Nine states still tax Social Security in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Will West Virginia stop taxing Social Security?
Yes, West Virginia will eliminate Social Security taxes starting in 2026, making it more retiree-friendly.
Can I avoid Social Security taxes by lowering my income?
Yes, reducing your adjusted gross income can help keep more of your Social Security benefits untaxed, especially with strategic withdrawals or Roth conversions.