The annual cost-of-living adjustment Social Security recipients receive is both a blessing and a curse. On one hand, additional money, even if small, is welcome. On the other, those extra dollars can boost incomes just enough that beneficiaries may have to pay more taxes. Even worse, only 10 states still tax Social Security, which means some retirees could see a reduction in their benefits.
Plan early and check out 3 Best and 3 Worst States to Retire in 2025 to plan accordingly
Which States Still Tax Social Security Benefits?
These ten states tax benefits:
| State | Taxation Policy |
| Colorado | If you’re 65 or older and your Social Security benefits included in your federal taxable income top $24,000, you can subtract the full amount of those benefits from your Colorado tax returns. However, if you’re under 65 years old, only up to the first $20,000 isn’t taxed. The law will change for tax year 2025 to widen the age range to 55 to 64 for those who can take the full deduction up to $24,000. |
| Connecticut | Single Social Security recipients with adjusted gross income (AGI) below $75,000 and $100,000 for married joint filers aren’t taxed on their benefits. However, if your income tops those thresholds, 25% of your benefits may be taxed. |
| Minnesota | Social Security benefits are fully or partially exempt from Minnesota’s income tax. Exemptions phase out at $105,380 if married and filing jointly or $82,190 for singles. |
| Montana | Your AGI will determine how much tax you pay on your Social Security benefits. |
| Nebraska | For tax year 2024, 80% of your Social Security benefits are exempt from tax. Starting in 2025, you won’t have to pay any tax on Social Security checks. |
| New Mexico | Only the very top earners must pay tax on their benefits. Most Social Security recipients don’t. Single taxpayers with incomes below $100,000, married filing jointly couples earning less than $150,000, and married filing separately couples below $75,000 are exempt from Social Security tax. |
| Rhode Island | If your income exceeds $104,200 for single filers or $130,250 if you’re filing jointly, or if you’re younger than what Social Security considers full retirement age, you get no tax break. |
| Utah | Your benefits will be taxed if your income is $45,000 or more, $75,000 or more if you’re head of household or married filing jointly, or $37,500 if married filing separately. Below those thresholds, you may be able to claim a nonrefundable credit for your benefits. |
| Vermont | Single taxpayers with AGI below $50,000 and joint filers with AGI below $65,000 don’t pay any tax on their benefits. For all other filers, the income threshold for the full exemption is $50,000. The exemption phases out beyond those levels. |
| West Virginia | If your income hits $100,000 or more for couples filing jointly or $50,000 or more for single filers, at least some of your benefits may be taxed. |
How Do States Still Tax Social Security?
Taxation methods vary widely, so check your state’s laws. However, these are the most common ways states still tax Social Security:
- Age-based taxation: Some states, like Colorado, tax Social Security benefits for those under 65 but offer full exemptions for older residents.
- Income-based taxation: New Mexico only taxes Social Security for individuals earning above $100,000 and couples earning more than $150,000.
- Taxable income inclusion: Minnesota taxes Social Security income that’s considered taxable by the federal government, though some recipients qualify for a state-level exemption.
How Much Can You Make from Social Security Without Paying Taxes?
The best way to avoid taxes on Social Security benefits is to limit your taxable income by investing with a Roth IRA. Roth IRA withdrawals aren’t counted as taxable income. Additionally, withdrawals from health savings accounts (HSAs) for qualified expenses are also tax-free.
Some states are phasing out Social Security taxes. For example, Missourians no longer have to pay state tax on their benefits as of 2024. If the trend continues, more states may follow suit, reducing the number of states that still tax Social Security in the future.
What About Trump’s Plan to Eliminate Social Security Taxes?
Former President Donald Trump has proposed eliminating federal taxes on Social Security benefits. However, this would not affect states that still tax Social Security—state-level taxation policies would remain unchanged unless individual states decide to follow suit.
For more retirement benefits, check out Top 10 States to Retire Comfortably on $1,976 Social Security
FAQs
Which states still tax Social Security benefits in 2024?
As of 2024, ten states still tax Social Security benefits, including Colorado, Connecticut, Minnesota, and Utah.
How can I avoid paying States Still Tax Social Security?
Moving to a state that doesn’t tax Social Security or keeping your income below state tax thresholds can help you avoid taxes.
Will Social Security taxes be eliminated in the future?
Some states have been phasing out Social Security taxes, but it depends on future legislation at both state and federal levels.