The 8 States That Still Tax Social Security (and Who Actually Pays)

While the following states still have laws on the books taxing Social Security, the “sticker price” can be misleading. Many have high income thresholds that exempt the middle class. Here is the breakdown for the 2025–2026 tax years.

1. Colorado

Colorado is often listed as a state that taxes Social Security, but for most traditional retirees, it is effectively tax-free. The state differentiates heavily based on age.

• Age 65 and Older: You can deduct all of your federally taxable Social Security benefits. If you are 65+, you generally won’t pay state tax on your benefits.
• Age 55 to 64: This is where the tax hits. However, starting in 2025, a new law allows you to deduct all Social Security income if your Adjusted Gross Income (AGI) is $75,000 or less (single) or $95,000 or less (joint). Above these limits, you typically get a standard $20,000 pension/annuity subtraction.

2. Connecticut

Connecticut has a reputation for high taxes, but its exemptions for retirees are relatively robust. You are fully exempt from paying state taxes on Social Security if your Adjusted Gross Income (AGI) falls below these thresholds:

• Single Filers: Less than $75,000.
• Married Filing Jointly: Less than $100,000.

If you earn above these amounts, you may still only be taxed on a portion (no more than 25%) of your benefits, but high earners should definitely consult a tax professional.

3. Minnesota

Minnesota uses a tiered approach. While it taxes Social Security, recent legislation has significantly raised the income caps, exempting most middle-income retirees.

• The Rule: For the 2025 tax year, benefits are generally exempt if your AGI is below approximately $82,190 (single) or $105,380 (married).
• The Phase-Out: If you earn above these limits, the exemption isn’t lost all at once; it gradually phases out. This creates a “tax ramp” rather than a cliff, but high-income earners in the North Star State will likely see a tax bill.

4. Montana

Montana has a unique system. It taxes Social Security benefits but offers a standard subtraction for seniors to help offset the cost. However, unlike New Mexico or Colorado which offer full exemptions for many, Montana’s approach is less generous for those with higher incomes.

• The Deduction: Taxpayers age 65 and older generally receive a subtraction (around $5,500) from their federal taxable income.
• The Impact: Because Montana taxes many forms of retirement income, it is often ranked as one of the least tax-friendly states for wealthy retirees. Always check the latest legislative updates, as Montana frequently debates bills to repeal this tax.

5. New Mexico

New Mexico has made aggressive moves to become more retiree-friendly. While technically a “taxing” state, the exemptions are high enough that most retirees are safe.

• Single Filers: Exempt if income is under $100,000.
• Married Filing Jointly: Exempt if income is under $150,000.

If you earn over these amounts, the tax applies. Note that these are “cliffs”—earning one dollar over the limit could theoretically expose your benefits to taxation, so careful income planning is essential.

6. Rhode Island

Rhode Island protects your Social Security from taxes, but only if you meet two specific criteria: age and income.

• Age Requirement: You must have reached your Full Retirement Age (FRA) (typically 66 or 67) to qualify for the exemption. Early retirees (e.g., age 62) do not qualify.
• Income Requirement: Your AGI must be below approximately $107,000 (single) or $133,750 (married). (Note: These figures are indexed for inflation and change slightly each year; verify the 2025 rates with the state division of taxation).

7. Utah

Utah is an outlier. Instead of an income exemption (where you subtract income from your tax return), Utah uses a tax credit.

• How it works: You calculate your tax liability including Social Security, and then apply a tax credit to cancel it out.
• The Limits: For the 2025 tax year, the state expanded eligibility. The full credit is available if your Modified AGI is under $45,000 (single) or $90,000 (married).
• The Phase-Out: Above those amounts, the credit is reduced by 25 cents for every dollar of income. This aggressive phase-out means upper-middle-class retirees in Utah are more likely to pay tax on their benefits than those in New York or California.

8. Vermont

Vermont is another state actively raising its thresholds to help seniors, though it remains one of the stricter states on this list.

• The Thresholds: For 2025, lawmakers increased the exemption thresholds. You are typically fully exempt if your AGI is $55,000 or less (single) or $70,000 or less (married).
• The Phase-Out: The exemption phases out for single filers between $55,000 and $65,000, and for couples between $70,000 and $80,000. If you earn above the upper limit, your benefits are fully taxable at state rates.