States That Tax Social Security Benefits

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Once you start receiving Social Security benefits, you’ll owe federal taxes on a portion of the payments if your income exceeds certain thresholds. You might also owe state taxes on the benefits depending on where you live. 

For the 2024 tax year, nine states tax Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia. All other states and the District of Columbia do not tax the payments.

West Virginia has started phasing out the tax on Social Security benefits and will completely eliminate it starting in 2026. Several other states are either in the process of phasing out the tax or are exploring eliminating the tax entirely.

Here’s what else you should know about states that tax Social Security.

States that tax Social Security payments

Below you’ll find the tax rates for each state that taxes Social Security as well as any exemptions.

Colorado

Colorado’s state tax rate is 4.40 percent for the 2024 tax year. Colorado taxpayers who are 65 and older as of Dec. 31 of the tax year can subtract the full amount of their Social Security benefits from their Colorado tax return. Those aged 55-64 can deduct up to $20,000 in retirement income, but retirement income above that threshold will be taxed. Starting in 2025, taxpayers aged 55-64 can deduct all Social Security benefits if their adjusted gross income is $75,000 or less (individual) or $95,000 or less (couple filing jointly).

Connecticut

Connecticut’s state income tax rate ranges from 2 percent to 6.99 percent. Connecticut taxpayers whose adjusted gross income is $75,000 or less (individuals and married filing separately) or $100,000 or less (joint filers and heads of household) can deduct 100 percent of their federally taxable Social Security income. If your income is above those thresholds you’ll get a partial exemption and no more than 25 percent of your benefits will be taxed.

Minnesota

Minnesota state income tax rates range from 5.35 percent to 9.85 percent. Minnesota allows taxpayers to subtract a portion of their Social Security payments from their adjusted income as long as they meet certain income thresholds. In 2024, the simplified method allows taxpayers with AGIs below $105,380 for married joint returns — or $82,190 for single or head of household filers — to subtract all taxable Social Security benefits. The subtraction is phased out by 10% for each $4,000 of income in excess of the thresholds mentioned. For married filing separately filers, the phaseout is 10% for each $2,000 of income over $50,000.

Montana

Montana state income tax rates range from 4.7 percent to 5.9 percent. A portion of Social Security payments may be deductible depending on your income level. Those with income below $25,000 (single filer) or $32,000 (joint filer) will not be taxed on Social Security.

New Mexico

New Mexico state income tax rates range from 1.70 percent to 5.90 percent. As of the 2022 tax year, most seniors in New Mexico are exempt from Social Security taxes, thanks to changes in the law. Seniors with incomes below the following levels will not have to pay taxes on Social Security:

• Single taxpayers: $100,000
• Married filing jointly, surviving spouses and heads of household: $150,000
• Married filing separately: $75,000

Rhode Island

Rhode Island state income tax rates range from 3.75 percent to 5.99 percent. If you’ve reached full retirement age and received Social Security benefits during the year, Rhode Island provides an exemption as long as your income is below the following levels for the 2023 tax year:

• Single, married filing separately, head of household: $101,000
• Married filing jointly: $126,250

Utah

Utah has a flat state income tax of 4.55 percent. Utah allows for a tax credit for Social Security payments based on adjusted gross income thresholds of $45,000 for single filers, $37,500 for married filing separately and $75,000 for married filing jointly.

Vermont

Vermont state income tax rates range from 3.35 percent to 8.75 percent. Vermont offers an exemption for taxpayers with low to middle income levels. The exemption applies in full for married filing jointly and civil union filing jointly up to $65,000 in adjusted gross income. For all other filers, the income threshold for the full exemption is $50,000. The exemption phases out beyond those levels.

West Virginia

West Virginia state income tax rates range from 2.36 percent to 5.12 percent. West Virginia is in the process of phasing out taxes on Social Security benefits. For the 2024 tax year, 35 percent of Social Security benefits included in adjusted gross income can be subtracted. That number jumps to 65 percent in 2025 and to 100 percent in 2026.

Bottom line

Understanding how your Social Security benefits will be taxed is an important part of preparing for retirement. Most states don’t tax these payments at all, but some still do. While many retirees consider these tax issues when choosing where to spend their golden years, remember that Social Security taxes are just one element of the equation to consider. Sales tax, property taxes and the overall cost of living should also impact your decision on where to retire.