Lawmakers in two states are pushing to change rules around the taxation of Social Security benefits to change. These changes could have a significant impact on many Americans who rely on Social Security as part of their retirement income.
For millions of Americans receiving Social Security benefits each month these changes could offer some relief. In some states taxpayers are required to pay taxes on these benefits which can take a significant chunk out of their monthly check. If you’re wondering about how these changes could affect you check out our guide on 2 Changes Under the Donald Trump Administration That Could Affect Your Social Security.
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What to Know About Proposed Social Security Benefits to Change
Social Security claimants in Vermont and Utah could end up with some extra cash in their pockets if two separate proposals become law.
In Utah Governor Spencer Cox has proposed an elimination of state taxes on Social Security income. Currently taxes start at $45,000 in income for single filers and $75,000 for joint filers. The proposal will need to be reviewed along with the rest of Cox’s budget before it can become law. The Utah Legislature will determine the state’s budget for the upcoming fiscal year which begins in July. Lawmakers are set to convene for the 2025 general session on January 21 and the budget will be finalized on March 7.
Similar moves are being made in Vermont. A group of bipartisan lawmakers wants to raise the threshold at which Social Security taxes apply with the view to eventually eliminating it altogether. Vermonters with incomes under $50,000 per year and couples with incomes under $65,000 per year do not pay state taxes on their Social Security benefits. This covers around half of the 161,841 Social Security recipients in Vermont. according to Vermont Public.
The bill in Vermont has been put forward by Democrat Representative Dan Noyes and Republican Representative Jim Harrison. Noyes said the bill “proposes to phase out Vermont income tax over a period of eight years, with the first round increasing the current exemption by $15,000, the second year $12,000, and $10,000 for each subsequent year.”
If you’re looking to understand more about how Social Security works in different states don’t miss our article on 9 U.S. States Are Still Delivering SNAP Benefits: Here Are Your Dates and Approved Amounts.
Proposed Changes in Utah and Vermont: A Comparison
| State | Proposed Change | Current Tax Rules | Potential Impact |
| Utah | Eliminate state tax on Social Security income | Taxes apply to incomes over $45,000 (single) or $75,000 (joint) | Lower tax burden for seniors, extra money for retirement |
| Vermont | Raise income thresholds for Social Security tax exemption | No tax for incomes under $50,000 (single) or $65,000 (joint) | Reduced taxes for lower-income Social Security recipients |
What People Are Saying About These Changes
Utah Governor Spencer Cox expressed in his proposed budget: “By implementing this tax cut, Utah will demonstrate its dedication to the well-being of older adults and foster a more supportive environment for those who have contributed to the state’s growth and prosperity.”
This proposal aims to give more financial freedom to seniors in Utah ensuring they have more of their Social Security benefits to change to rely on. In Vermont the bipartisan support for eliminating or raising the tax threshold shows a growing recognition of the need to provide financial relief to Social Security recipients especially those with lower incomes.
What’s Next for Social Security Taxes?
Nationwide changes to Social Security taxes could be coming soon as President-elect Donald Trump has also pledged to eliminate all federal taxes on Social Security income during his second administration. However, this change would only apply to federal taxes, not state level income taxes which are handled separately by individual states.
While these changes are still under consideration, they could significantly impact Social Security recipients across the country, potentially keeping more money in their pockets. If you’re a Social Security recipient keep an eye on these developments as they progress in 2025 and beyond.
FAQs Social Security Benefits To Change for Thousands
How are Social Security benefits taxed?
Currently, federal taxes may apply to Social Security benefits if your income exceeds certain thresholds. At the state level, only nine states impose a tax on Social Security benefits.
What’s happening in Utah with Social Security taxes?
Governor Spencer Cox has proposed eliminating state taxes on Social Security income in Utah, which would provide more financial relief to Social Security recipients.
How does the proposal in Vermont affect Social Security taxes?
Vermont lawmakers are working on a proposal to raise the threshold at which Social Security taxes apply, with the eventual goal of eliminating the state-level tax altogether for many recipients.
Will these changes affect federal taxes on Social Security?
The proposed changes in Utah and Vermont focus on state-level taxes, but President-elect Donald Trump has pledged to eliminate all federal taxes on Social Security benefits starting in 2025.
Final Words Social Security Benefits To Change for Thousands
The proposed changes to Social Security taxes in Utah and Vermont are part of a growing trend to reduce the tax burden on Social Security recipients. If passed, these changes could provide financial relief for many older Americans who rely on Social Security for their income. Stay informed about these developments and how they might affect your Social Security benefits in the coming years.