Forty-one States Exempting Social Security Payments from Income Taxation

Social Security income can indeed be taxed, despite common misconceptions. If you earn significant income beyond your Social Security benefits, up to 85% of those benefits might be included in your taxable income calculation. Despite this, there's a silver lining – most of the time, Social Security isn't taxed at the state level. In fact, 41 states graciously exempt Social Security income from state income tax as of 2025, sparing retirees from additional financial burden.

So, are you curious to find out if your state is among the 41? Here's the list you've been waiting for, arranged alphabetically:

Alabama
Alaska
Arizona
Arkansas
California
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington (both state and D.C.)
Wisconsin
Wyoming

If your state echoes these names, rejoice! You'll avoid paying state taxes on your Social Security income, regardless of how much additional retirement income you may have or if you're still working.

Truth be told, some of these exempt states boast zero income tax. But even in other instances, the exemption can mean substantial savings. For example, if you pull in $20,000 annually from Social Security in South Carolina, you could save up to $1,400, considering its 7% top marginal tax rate.

Importantly, this list is expected to grow as time marches on, with states like West Virginia already phasing out Social Security benefit taxes by 2026.

However, nine states in the U.S. still levy taxes on Social Security benefits – Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Fear not, though, as even these states operate with more lenient rules than the federal government for taxing Social Security benefits. For instance, Colorado slaps taxes on benefits solely for those under 65 with earnings above specific levels.

Remember, this state-imposed tax is just one aspect of a broader tax picture. While it may be less than ideal for those living in these nine states, it's crucial to consider the entire tax spectrum of each state. Some of these taxing states, for instance, boast less stringent taxes on other income sources.

Bottom line? While tax on your Social Security benefits may seem daunting, don't lose sight of the bigger tax picture. Keep your eyes on the prize, and Ceasefire! 🔥💥

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In nine states, Social Security benefits are still taxable, albeit with lenient rules:

Colorado – Some retirees pay taxes on their benefits. Individuals aged 65 and older can deduct Social Security income for state tax purposes, while those between 55 and 64 who have certain incomes below specific thresholds can also enjoy the same benefit.
Connecticut – Retirees pay taxes only if their adjusted gross income (AGI) surpasses $75,000 (for individuals) or $100,000 (couples). However, 75% of the benefits remain exempt from state taxes.
Minnesota – Couples must earn below $108,320 ($84,490 for singles) to enjoy tax exemption. Others may still face taxes but are hopeful for a gradual elimination as some state lawmakers push for this change.
Montana – Montanans with income over $32,000 (married couples) or $25,000 (single individuals) are subject to state taxes. Deductions are allowed for high-income taxpayers.
New Mexico – Most residents avoid state taxes on their benefits after legislators introduced a 2022 law that permits singles earning below $100,000 and married couples below $150,000 to fully exclude their Social Security payments from taxable income. Residents above those thresholds pay a tax rate of between 1.7% and 5.9%.
Rhode Island – Individuals with AGIs under $88,950 and married couples under $111,200 can avoid state taxes on their benefits.
Utah – Single households earning $30,000 and married couples enjoying $50,000 income are exempt from paying taxes on their Social Security income. However, some benefits in Utah are subject to the state's 4.55% income tax rate, which is offset by a complete tax credit for low-income families.
Vermont – Couples earning less than $65,000 and singles earning less than $50,000 are exempt from taxes on their Social Security benefits.
West Virginia – Individuals below the $50,000 income cap and married couples beneath $100,000 are exempt. West Virginia is phasing out its tax on Social Security benefits, with a 65% reduction in 2025 and total eradication by 2026.
For individuals residing in Colorado, the taxation of Social Security benefits depends on their age and income, with some retirees over 65 exempt from state taxation.
Connecticut retirees are subject to state taxes on their Social Security benefits only if their adjusted gross income surpasses certain thresholds, with 75% of the benefits remaining exempt.
In Minnesota, couples with income above a particular threshold must pay state taxes on their Social Security benefits, although some lawmakers are pushing for gradual elimination of this tax.
Montana residents with income over specified levels are subject to state taxes on their Social Security income, with deductions allowed for high-income taxpayers.
New Mexico recently introduced a law exempting singles earning less than $100,000 and married couples earning less than $150,000 from taxable income due to their Social Security payments.
Rhode Island retirees can avoid state taxes on their Social Security benefits if their adjusted gross income is below specific thresholds, providing relief for many.
Though singles earning $30,000 and married couples earning $50,000 in Utah are exempt from state taxes on Social Security income, some benefits are still subject to the state's income tax rate.
Vermont retirees with income below $50,000 (singles) or $65,000 (couples) are exempt from taxes on their Social Security benefits, offering financial relief to many.
West Virginia is phasing out its taxation of Social Security benefits, aiming to completely eliminate it by 2026, a development that will significantly benefit its residents.