The States Targeting Your Social Security Benefits Next Year: Planning for retirement involves more than just saving money; it’s essential to understand how your income—especially Social Security benefits—will be taxed. While the federal government taxes Social Security benefits based on your combined income, some states also impose their own taxes on these benefits. As of 2025, nine states continue to tax Social Security benefits. Each state uses different rules, thresholds, and exemptions, which can significantly impact your retirement income. In this article, we’ll break down what you need to know, offer practical advice, and help you prepare smarter for retirement.
The States Targeting Your Social Security Benefits Next Year
Understanding the hidden taxes on Social Security is key to making the most of your retirement income. While only nine states currently tax these benefits, the impact can be significant—especially if you live in or are considering relocating to one of them. The good news? With a little planning, you can minimize or even avoid these taxes. By staying informed and working with financial experts, you’ll be better positioned to protect your retirement income and live more comfortably.
| State | Taxation Details | Exemptions / Credits |
|---|---|---|
| Colorado | Taxes Social Security benefits. | Full deduction for age 65+; partial for 55–64. |
| Connecticut | Taxes Social Security benefits. | Full exemption for AGI ≤ $75,000 (single) / $100,000 (joint). |
| Minnesota | Taxes benefits taxed federally. | Full exemption if AGI ≤ $105,380 (joint) / $82,190 (single); partial otherwise. |
| Montana | Follows federal taxation rules. | Full exemption for AGI ≤ $25,000 (single) / $32,000 (joint). |
| New Mexico | Taxes benefits but offers generous exemptions. | Exempts full benefits for incomes ≤ $100,000 (single) / $150,000 (joint). |
| Rhode Island | Taxes benefits with age and income limits. | Exempts full benefits if at full retirement age and AGI ≤ $86,350 (single) / $107,950 (joint). |
| Utah | Taxes benefits, but offers offsetting credits. | Credit for income ≤ $30,000 (single) / $50,000 (joint); phases out gradually. |
| Vermont | Taxes federally taxable benefits. | Full exemption for AGI ≤ $50,000 (single) / $65,000 (joint); partial up to $60,000 / $75,000. |
| West Virginia | Phasing out taxation of benefits entirely. | 65% exemption in 2025; full exemption by 2026. |
Understanding Social Security Taxation
Before diving into state-specific rules, it’s important to understand how Social Security benefits are taxed federally:
- 0% Taxable if your combined income is below $25,000 (single) or $32,000 (married filing jointly).
- Up to 50% of benefits may be taxable if income is slightly above those thresholds.
- Up to 85% becomes taxable once you surpass $34,000 (single) or $44,000 (joint).
Combined income = AGI + nontaxable interest + ½ of Social Security benefits.
The States Targeting Your Social Security Benefits Next Year Explained
Colorado
While Colorado taxes Social Security, residents 65+ can deduct 100% of their federally taxed benefits. For those aged 55–64, partial deductions apply based on income.
Connecticut
Connecticut fully exempts Social Security if your AGI is under $75,000 (single) or $100,000 (married). Beyond that, a 25% phase-in reduction kicks in.
Minnesota
This state follows federal guidelines but offers its own subtractions. If you’re under $105,380 (married) or $82,190 (single), your benefits are fully exempt.
Montana
Montana adheres to federal taxation rules. However, if your income is below $25,000 (single) or $32,000 (joint), you may avoid state tax altogether.
New Mexico
New Mexico now exempts benefits for incomes up to $100,000 (single) and $150,000 (joint). This change aligns with recent legislative efforts to ease the burden on retirees.
Rhode Island
Here, age matters. You must be at full retirement age and under a specific income limit ($86,350 single, $107,950 joint) to qualify for exemption.
Utah
Utah offers tax credits that offset the tax on benefits. If your income is below $30,000 (single) or $50,000 (joint), you’ll likely owe little to nothing.
Vermont
Vermont exempts benefits for those with incomes up to $50,000 (single) or $65,000 (joint). Partial exemptions phase out at slightly higher thresholds.
West Virginia
West Virginia is phasing out its Social Security tax: 65% exemption in 2025, full exemption by 2026—a welcome change for retirees.
Practical Tips to Reduce Taxes on Social Security
Here are smart steps to protect your retirement income:
- Know Your State’s Rules: Even if you pay federal tax, you might avoid state tax depending on where you live.
- Manage Withdrawals: Withdraw strategically from retirement accounts to keep your AGI low.
- Consider Relocation: States like Florida, Texas, and Nevada don’t tax Social Security at all.
- Work With a Financial Planner: Personalized planning can help minimize tax burdens.
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FAQs About The States Targeting Your Social Security Benefits Next Year
1. Which states do not tax Social Security benefits at all?
Yes—currently, 41 states do not tax Social Security income. These include popular retirement destinations like Florida, Texas, Arizona, and Nevada.
2. Will more states start taxing Social Security in the future?
Currently, no new state has announced plans to begin taxing Social Security. In fact, some (like West Virginia) are phasing it out entirely.
3. Do I have to pay taxes on my Social Security if I move states?
Yes, state taxes apply based on your residency. If you move from a state that taxes benefits to one that doesn’t, your tax situation may change.
4. Can I avoid taxes by reducing my income?
Yes—minimizing your combined income by adjusting withdrawals, delaying benefits, or managing investments can reduce or eliminate taxation.
5. Is the taxation of Social Security a major retirement concern?
For many, yes. Especially if you rely heavily on Social Security, state and federal taxes can significantly affect your take-home benefits.
