Your retirement location could cost you thousands: 9 states that still tax Social Security

For millions of retirees, Social Security is a financial lifeline. While most US states no longer tax Social Security benefits, a small group still does, often based on income thresholds, age or filing status.

Social Security benefits are designed to supplement retirement income, but they can also increase total household income enough to trigger tax obligations. The federal government taxes Social Security benefits once income crosses certain thresholds, and a handful of states apply their own rules on top of federal taxes.

The result: retirees in some states may face both federal and state taxes on their benefits.

States that tax Social Security

As of the 2025 tax year, nine states still tax Social Security income. However, many offer exemptions, credits or income-based phase-outs that reduce the burden for lower- and middle-income retirees.

Colorado

Colorado offers significant relief based on age:

• Under 65: First $20,000 of benefits exempt
• Age 55-64 (new change): Up to $24,000 deduction allowed.
• 65 and older: Social Security benefits are fully exempt from state tax.
  

Connecticut

Taxation depends on income:

• No tax if AGI is below $75,000 (single) or $100,000 (married).
• If income exceeds thresholds, up to 25% of benefits may be taxed.
  

Minnesota

Benefits are partially or fully exempt:

• Phase-outs begin at $84,490 (single) or $108,320 (married).
• Higher earners may still owe state tax on benefits.
  

Montana

Montana taxes Social Security based on adjusted gross income (AGI).
Higher-income retirees are more likely to owe state tax.

New Mexico

Most residents are exempt:

• No tax if income is below
  
  • $100,000 (single)
  • $150,000 (married filing jointly)
  • $75,000 (married filing separately)
    

Rhode Island

Taxes apply if:

• Income exceeds $107,000 (single) or $133,750 (married)
• Or if you claim benefits before full retirement age
  

Utah

Utah uses income thresholds and credits:

• Benefits taxed if income exceeds
  
  • $54,000 (single)
  • $90,000 (married/head of household)
  • $45,000 (married filing separately)
• Lower-income retirees may claim a nonrefundable tax credit.
  

Vermont

Income thresholds determine exemptions:

• No tax if AGI below $50,000 (single) or $65,000 (joint).
• Exemptions phase out above these levels.
  

West Virginia (Phasing Out Tax)

West Virginia is transitioning away from Social Security taxes:

• Starting 2025, 65% of benefits can be deducted.
• The state is moving toward fully eliminating Social Security taxation by 2026.
  

Over the past decade, many states have eliminated Social Security taxes to attract retirees and reduce financial strain on older residents. Nebraska recently removed its tax, and West Virginia is following the same path.

Today, over 40 states do not tax Social Security benefits at all, making retirement relocation a strategic financial decision for some Americans.