Millions of Americans count on Social Security as a lifeline during retirement. However did you know that some states still tax these benefits? While many states have eliminated these taxes 9 states continue to tax Social Security benefits in 2025. Here is what you need to know about these states the rules and the ongoing efforts to reduce this burden on retirees.
Why Do Some States Tax Social Security?
While federal taxes on Social Security are common for higher-income earners, states have their own tax rules. Supporters of taxing Social Security argue it boosts state budgets but critics claim it unfairly reduces benefits that retirees have worked hard to earn.
In recent years a growing movement has pushed for the elimination of these taxes. States like Kansas, West Virginia and now Utah are working to phase out or eliminate them altogether.
States That Tax Social Security Benefits in 2025
Below is a table summarizing the states where Social Security is still taxed and their respective rules:
| State | Key Tax Rules |
| Colorado | Benefits taxable above certain income levels; deductions allowed for seniors. |
| Connecticut | Income over $75,000 (single) or $100,000 (couples) is taxed; 75% of benefits exempt. |
| Minnesota | Benefits taxed for incomes above $108,320 (couples) or $84,490 (singles). |
| Montana | Income above $25,000 (single) or $32,000 (couples) is taxed, with deductions for higher incomes. |
| New Mexico | Tax-free for incomes below $100,000 (single) or $150,000 (couples). |
| Rhode Island | Tax-free for incomes below $104,200 (single). Others pay 3.75%–5.99% on benefits. |
| Vermont | Tax-free for incomes below $50,000 (single) or $65,000 (couples). Tax applies above those levels. |
| Utah | Some benefits taxed at 4.55%, with tax credits for lower-income households. |
| West Virginia | Phasing out Social Security taxes completely by 2026. |
Why States Are Eliminating These Taxes
Rising inflation has made it harder for retirees to afford essentials. Advocates argue that cutting these taxes helps seniors keep more of their benefits, easing financial pressures. For example, Utah is considering a bill that could save households nearly $1,000 annually.
Rising inflation has sparked discussions around the Social Security Fairness Act. This legislation aims to change how benefits are taxed, potentially reducing retirees’ financial burden. Learn more in our guide on How the Social Security Fairness Act Impacts Your Benefits.
FAQs
Are Social Security benefits taxed federally?
Yes, if your combined income exceeds certain limits, you may pay federal taxes on your benefits.
Why do states tax Social Security?
States argue it helps fund public programs, but many people feel it unfairly reduces their retirement income.
Which states are removing Social Security taxes?
Kansas and West Virginia recently passed laws to eliminate these taxes, with Utah likely following soon.
What is the income limit for Social Security taxes?
Limits vary by state. For example in Connecticut, singles earning below $75,000 are exempt, while in Vermont, the threshold is $50,000.
Final Words
Though fewer states tax Social Security benefits today 9 states still have such policies in 2025. As inflation continues to challenge retirees the push to end these taxes is gaining momentum. For retirees knowing your state is rules can help you better plan your finances during your golden years.