As retirees across the United States plan their finances for 2025, understanding how Social Security benefits are taxed at the state level is crucial. While the federal government may tax up to 85% of Social Security benefits based on income levels, state taxation varies significantly. The good news for many is that a majority of states offer relief by not taxing these benefits.

States That Do Not Tax Social Security Benefits

In 2025, 41 states and the District of Columbia will not tax Social Security benefits. This includes states with no state income tax or specific exemptions for Social Security income.

States with No State Income Tax:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

States with Income Tax but Exempt Social Security:

• Alabama
• Arizona
• Arkansas
• California
• Delaware
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Nebraska
• New Hampshire
• New Jersey
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• Virginia
• Washington, D.C.
• Wisconsin

States That Tax Social Security Benefits

Nine states tax Social Security benefits to varying degrees. However, many states offer exemptions or deductions based on income levels, age, or other criteria.

1. Colorado: Residents aged 65 and older can deduct all Social Security income. Starting in 2025, those aged 55 to 64 can also deduct all benefits if their adjusted gross income (AGI) is below $75,000 (single) or $95,000 (joint filers).
2. Connecticut: Full exemption for single filers with AGI under $75,000 and joint filers under $100,000. Above these thresholds, a portion of the benefits may be taxable.
3. Minnesota: Offers a subtraction for Social Security income based on AGI. For 2025, single filers with AGI below $84,490 and joint filers below $108,320 may qualify for full exemption.
4. Montana: Taxes Social Security benefits for single filers with AGI over $25,000 and joint filers over $32,000. Deductions are available for higher-income taxpayers.
5. New Mexico: Exempts Social Security benefits for single filers with AGI under $100,000 and joint filers under $150,000. Those above these thresholds may owe taxes on benefits.
6. Rhode Island: Provides exemptions for individuals who have reached full retirement age and have AGI below $88,950 (single) or $111,200 (joint filers).
7. Utah: Offers a tax credit for Social Security income based on AGI. For 2025, single filers with AGI under $30,000 and joint filers under $50,000 may qualify for a full credit. Kiplinger
8. Vermont: Exempts Social Security benefits for single filers with AGI under $50,000 and joint filers under $65,000. Partial exemptions apply for incomes slightly above these thresholds.
9. West Virginia: Currently phasing out taxation on Social Security benefits. In 2025, 65% of benefits are exempt, with full exemption scheduled for 2026.

Understanding the tax implications of Social Security benefits is essential for effective retirement planning. Retirees should consult with tax professionals or state tax agencies to navigate the complexities of state-specific tax laws. For more detailed information, visit the Internal Revenue Service (IRS) and your respective state’s department of revenue.

However, this rule doesn’t apply uniformly to all residents. In states that tax Social Security benefits, not everyone is subject to the full tax. Take Colorado, for instance: since the 2022 tax year, residents aged 65 and older have been allowed to fully deduct any federally taxed Social Security benefits on their state income tax returns. Starting in 2025, this full exemption will also apply to residents aged 55 to 64, provided their adjusted gross income does not exceed $75,000 for single filers or $95,000 for joint filers.