Social Security plays a big role in many Americans’ retirement security. In fact, 40% of Americans ages 65 and older rely on Social Security for at least half their income, according to the AARP. But where you live can make a big difference on how much of your Social Security check you get to keep.
Not only can up to 85% of your Social Security benefits be subject to federal taxation, depending on your income, you could also face state income taxes on Social Security benefits. Fortunately, the list of states that tax Social Security is shrinking, and only nine will do so in 2025.
“The list of states that do not tax Social Security is much longer than those that do,” said Brian Kuhn CFP, CLU, SVP and financial advisor at Wealth Enhancement Group. “And each state makes its own rules, which sometimes change, including, recently, in Missouri and Nebraska.”
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Missouri and Nebraska have decided to stop taxing Social Security benefits in 2024. Kansas also joined in with a bill signed midway through 2024, so the state will not tax Social Security going forward.
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Only 9 States Will Tax Social Security in 2025
Only nine states do or will continue to tax Social Security benefits in 2025. These include:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
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Kansas is no longer part of this list, and West Virginia is phasing out Social Security taxes, with no state income taxes on Social Security starting in 2026.
“Each state has tax provisions that could provide deductions for individuals below certain thresholds or ages, making each state unique,” Kuhn said.
Most States Won’t Tax Social Security in 2025
Most states, 41 in total plus Washington, D.C., won’t tax your Social Security benefits in 2025, based on current laws.
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These states are:
- 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
- Wisconsin
- Washington, D.C.
- Wyoming
How Much Do Retirees Save on Social Security Taxes in These States?
Kuhn pointed out that you can calculate how much you’re saving on taxes — assuming you live in a state that does not tax Social Security benefits — by looking up the effective rate of tax you paid to your state for all taxed income sources and applying that to your total Social Security benefits.
“So, for example, if your effective rate in your state was 5%, and you received $30,000 in Social Security benefits, that would be a savings of $1,500,” Kuhn said.
However, this does not apply to all situations. Not everyone who lives in the states that tax Social Security income face the full tax. For example, in Colorado, residents ages 65 and older have been able to fully deduct federally taxed Social Security benefits on their state income tax returns since tax year 2022. For 2025, that full exemption will expand to include those ages 55 to 64 with an adjusted gross income equal to or less than $75,000 for individuals or $95,000 for couples filing jointly.
So, it’s important to look at the specific rules of your state and at your own tax situation.
Still, from a big-picture perspective, the amount saved among retirees whose benefits aren’t taxed is quite impressive.
“In Missouri, for instance, retirees are looking at a collective annual saving of around $309 million,” said Jeff Rose, CFP, founder of Good Financial Cents. “Over in Nebraska, it’s about $17 million. That’s a lot of money that retirees get to keep in their pockets instead of it being drained away by state taxes.”
