For many retirees, Social Security is a crucial source of income. But if you live in one of these nine states, you might be paying taxes on your benefits—on top of what the federal government already takes. While most states don’t touch Social Security income, these states still do, and that could mean less money in your pocket each month.
Which States Tax Social Security Benefits?
1. Colorado
Colorado taxes Social Security benefits, but there’s a silver lining. Residents 65 and older can deduct all federally taxable Social Security income. Those between 55 and 64 can deduct up to $20,000.
2. Connecticut
In Connecticut, your Social Security benefits could be taxed depending on your income. If you’re single and earn more than $75,000 (or $100,000 as a couple), up to 25% of your benefits may be taxed.
3. Minnesota
Minnesota follows federal guidelines when taxing Social Security benefits. However, the state does offer a partial exemption for retirees. If your income is under $105,380 (for joint filers), your benefits may be fully exempt.
4. Montana
Montana taxes Social Security benefits for individuals earning over $21,100 or couples making over $42,200. The tax rate can go up to 5.9%, though retirees aged 65 and older receive a $5,500 deduction.
5. New Mexico
New Mexico residents earning under $100,000 (single) or $150,000 (joint) are exempt from Social Security taxes. But if your income exceeds these limits, you could be taxed at rates between 1.7% and 5.9%.
6. Rhode Island
Rhode Island provides some relief for retirees. If you’ve reached full retirement age and earn below $130,250 (joint) or $104,200 (single), your benefits are tax-free. Otherwise, expect tax rates ranging from 3.75% to 5.99%.
7. Utah
Utah taxes Social Security benefits at a flat 4.55%. However, retirees may qualify for tax credits to help offset the cost.
8. Vermont
Vermont offers full tax exemptions for retirees earning under $50,000 (single) or $65,000 (joint). If you make more, you may still get a partial exemption.
9. West Virginia
Good news for retirees in West Virginia! The state is gradually eliminating Social Security taxes. In 2025, only 35% of benefits will be taxed, and by 2026, they’ll be completely tax-free.
How This Affects Retirees
If you live in one of these states, your Social Security benefits may not stretch as far as you thought. State taxes can take a bite out of your income, making it even more important to plan carefully for retirement.
Some states offer exemptions or tax breaks based on income, so make sure you check the latest rules. And if you’re thinking about relocating for retirement, choosing a state that doesn’t tax Social Security could save you thousands of dollars over time.
Are More States Changing Their Tax Policies?
Many states have been reconsidering their approach to Social Security taxes. West Virginia is phasing them out, and other states may follow suit. If you’re concerned about how taxes will impact your benefits, keep an eye on potential legislative changes in your state.
At the end of the day, your Social Security check should be working for you—not your state’s tax office. If you live in one of these nine states, make sure you understand the tax rules and plan accordingly to maximize your retirement income.
