Thedailymiaminews:- When it comes to retirement, Social Security benefits play a big role in securing a stable income. But did you know that some states still tax these benefits? While 41 states in the U.S. have chosen to exempt Social Security income from state taxes by 2025, there are still nine states where you’ll need to pay taxes on your Social Security benefits. If you’re planning your retirement or just curious about your current state’s tax policies, here’s a breakdown of the nine states that will continue taxing Social Security benefits in 2025.
Colorado
In 2025, Colorado will still tax Social Security benefits, but there’s a bit of good news. If you’re between the ages of 55 and 64 and your income is below $75,000 as a single filer (or $95,000 for couples filing jointly), you can fully deduct the benefits that are taxed federally. This provides some relief for those on a fixed income.
Connecticut
Connecticut also taxes Social Security benefits, but similar to Colorado, it offers exemptions for certain income levels. Single filers or married couples filing separately with an adjusted gross income (AGI) below $75,000, or couples filing jointly with an AGI under $100,000, won’t have to pay state taxes on their Social Security benefits.
Minnesota
In Minnesota, the rules are pretty clear: if your AGI is below $82,190 as an individual, or under $105,380 as a married couple, your Social Security benefits are exempt from taxation. This makes it a bit easier for retirees with lower incomes to keep more of their benefits.
Montana
In Montana, single filers with an AGI of less than $25,000, and joint filers with an AGI below $32,000, can fully deduct their Social Security benefits. While it’s a narrow range, it can provide significant savings for those who qualify.
New Mexico
New Mexico has become a friendlier state for retirees, as it no longer taxes Social Security benefits for individuals with earnings below $100,000 and married couples earning less than $150,000. This provides tax relief for a large portion of retirees in the state.
Rhode Island
Rhode Island has set its exemption limits at an AGI of $88,950 for individuals and $111,200 for married couples filing jointly. If you earn less than these thresholds, you can enjoy your Social Security benefits without the state taxing them.
Utah
Utah offers a relatively straightforward exemption: single filers making less than $30,000 and married couples earning under $50,000 won’t pay taxes on their Social Security benefits. This makes Utah a bit more tax-friendly for lower-income retirees.
Vermont
Vermont provides tax relief for lower-income retirees as well. If you’re an individual making less than $50,000 per year, or a married couple earning under $65,000, your Social Security benefits are exempt from state taxes.
West Virginia
West Virginia has plans to phase out taxes on Social Security benefits by 2026. But for 2025, if you’re a single filer earning less than $50,000, or a joint filer making less than $100,000, you won’t pay taxes on your Social Security benefits. The tax rate reduction started in 2024 and will continue each year until it is completely phased out by 2026.
Final Thoughts
If you’re living in one of the states that tax Social Security benefits, it’s important to understand how your state’s rules may impact your retirement finances. Thankfully, many states offer exemptions based on income levels, which can make a big difference in how much tax you’ll owe. Whether you’re planning for retirement or already living in one of these states, it’s always a good idea to stay informed about the tax laws that could affect your benefits.