If you’re nearing retirement or already receiving Social Security benefits, you may be surprised to learn that your payments aren’t always fully protected. While the federal government provides the checks, some states can tax part of your benefits, reducing your total monthly income.
As of 2025, nine U.S. states still tax Social Security in some way. Understanding which ones and how they do it is essential if you want to maximize your retirement income.
Why Do Some States Tax Social Security?
While Social Security benefits are exempt from taxation in most states, a handful have chosen to include them in their income tax calculations. These taxes vary by:
- Income level
- Filing status
- Age
- Retirement benefit type
If you live in or plan to move to one of these states, you could see your benefits reduced by hundreds or even thousands of dollars each year.
The 9 States That Tax Social Security in 2025
| State | How Social Security Is Taxed |
|---|---|
| Colorado | Partial exemption based on age. Full exemption if 65+, up to $20,000 deduction if younger. |
| Connecticut | No tax below certain income levels. Up to 25% taxed above $75,000 (single), $100,000 (joint). |
| Kansas | Fully taxed if AGI exceeds $75,000, regardless of filing status. |
| Minnesota | Partial exemptions. Tax starts if AGI exceeds $82,190 (single), $105,380 (joint). |
| Montana | Follows federal taxation model. Income over $25,000 (single) or $32,000 (joint) is taxed. |
| New Mexico | No tax below $100,000 (single) or $150,000 (joint). Tax applies beyond that. |
| Rhode Island | Exempt if at full retirement age and income is below $104,200 (single), $126,250 (joint). |
| Utah | Taxes benefits but offers credits to offset for incomes under $45,000 (single), $75,000 (joint). |
| Vermont | Exemption up to $50,000 (single), $65,000 (joint). Tapers off as income rises. |
How Much Could You Lose?
The exact amount deducted varies depending on your income. For example:
- A retiree in Kansas with $85,000 AGI could have up to 85% of their Social Security taxed at state income rates.
- A retiree in Utah may pay the tax but receive a nonrefundable credit, softening the blow.
That’s why knowing your adjusted gross income (AGI) and planning accordingly is key.
| Key Detail | Information |
|---|---|
| Number of States Taxing Benefits | 9 |
| Most Common Threshold | $75,000–$100,000 AGI |
| Max Federal Tax on Benefits | Up to 85% (also applies separately from state taxes) |
| Best Strategy | Keep AGI low, consider tax-friendly retirement states |
Tips to Reduce the Impact
If you’re living in one of these states or plan to move to one, here’s what you can do:
- Monitor your income: Staying under certain AGI thresholds can help you avoid state taxes entirely.
- Use Roth IRAs: Withdrawals from Roth accounts aren’t counted as taxable income.
- Review tax-friendly states: Consider relocating to one of the 41 states that don’t tax Social Security at all.
- Consult a financial advisor: Personalized advice can save you thousands over time.
Social Security is a lifeline for millions of retirees—but in these 9 states, a portion of that income could be lost to state taxes. Whether you’re currently retired or planning your retirement, it’s important to know how your location could affect your benefits.
By understanding state tax rules, keeping your income within the right thresholds, and planning strategically, you can protect more of your hard-earned Social Security income and enjoy a more comfortable retirement.
FAQs
Can I avoid state taxes on Social Security if I move?
Yes. Moving to a state that does not tax Social Security can help you keep more of your benefits.
Are Social Security benefits taxed federally too?
Yes. Depending on your total income, up to 85% of your Social Security may be taxed at the federal level, separate from state taxation.
How do I know how much of my benefits will be taxed?
Check your adjusted gross income and refer to your state’s income thresholds. You may also use tax software or consult a financial planner for an exact amount.