Most states don't tax Social Security, but some still do. Here's a list of the nine states that will tax your Social Security earnings in 2025, and how to make the most of your dollar. Will your state tax your Social Security earnings? Here's a breakdown of the nine states that tax Social Security benefits in 2025, along with their specific tax rules and income thresholds.
- Colorado: Social Security recipients aged under 65 have their first $20,000 of benefits exempt from state taxation. Those 65 and older are exempt from taxation on all Social Security earnings. A change for 2025 allows those aged 55 to 64 to claim a full deduction of up to $24,000.
- Connecticut: If your adjusted gross income (AGI) is below $75,000 for single filers and $100,000 for married joint filers, your benefits are exempt. However, if your income exceeds these thresholds, 25% of your benefits may be taxed.
- Minnesota: Social Security benefits are fully or partially exempt from Minnesota's income tax. Exemptions phase out at $108,320 for married filers and $84,490 for singles.
- Montana: Your AGI determines how much tax you pay on Social Security benefits.
- New Mexico: Most Social Security recipients in New Mexico are exempt from tax. Single taxpayers with incomes below $100,000, married filing jointly couples earning less than $150,000, and married filing separately couples below $75,000 are exempt.
- Rhode Island: If your income exceeds $107,000 for single filers or $133,750 for joint filers, or if you're younger than the full retirement age, you get no tax break.
- Utah: Benefits are taxed if your income is $54,000 or more, $90,000 or more for head of household or married filing jointly, or $45,000 if married filing separately. Below these thresholds, you may claim a nonrefundable credit for your benefits.
- Vermont: Single taxpayers with AGI below $50,000 and joint filers with AGI below $65,000 don't pay any tax on benefits. For all other filers, the income threshold for the full exemption is $50,000, with the exemption phasing out beyond this level.
- West Virginia: All West Virginia Social Security recipients may qualify for exemptions this year. For taxable years beginning on or after January 1, 2025, 65% of Social Security benefits received and included in federal AGI may be subtracted.
Is there a way to avoid taxes on Social Security? Social Security benefits can significantly impact Americans' cost of living, so paying taxes on that additional income can be frustrating and stress budgets. But these taxes are avoidable with a few key considerations. First, your state may not tax your Social Security benefits at all, eliminating the need for extra filing.
If you live in a state that does tax, consider your state's AGI threshold for taxation. If you're below that threshold, you may be able to avoid tax requirements. Additionally, delaying Social Security benefits, if your income allows, can help maximize checks and avoid taxation. What is an SSA-1099 form and how do you get it? The Social Security Administration sends you a Social Security Benefit Statement, or SSA-1099, in January to help you determine your benefits for the year. This form is crucial for calculating your tax liability when filing your federal tax return.
