Social Security is a key income source for over 72.5 million Americans in 2025, with an average monthly benefit of $1,976. At the federal level, up to 85% of these benefits can be taxed based on income. While most states don’t tax Social Security, a few still do—either partially or for higher-income retirees. This creates a risk of double taxation, where benefits are taxed both federally and at the state level.
Here’s a list of states where retirees may see their benefits shrink faster due to combined taxes. Knowing these rules can help you avoid unpleasant surprises and plan smarter for retirement.
Colorado
In 2025, Colorado residents aged 55–64 with adjusted gross incomes up to $75,000 (single) or $95,000 (joint) can deduct all federally taxed Social Security benefits from state income tax, per HB24-1142. Those over 65 already qualify for this full exemption. However, retirees who exceed these income thresholds may face double taxation at both the federal and state levels.
This policy change will reduce state revenue by $3.5 million in FY 2025-26. Despite recent reforms, retirees with higher incomes in Colorado remain at risk of partial state taxation on their Social Security benefits.
Connecticut
In 2025, Connecticut exempts 100% of federally taxable Social Security benefits for residents with adjusted gross incomes (AGIs) below $75,000 (single filers) or $100,000 (joint filers). Those exceeding these thresholds may still face partial state taxation on their benefits, leading to potential double taxation. Connecticut’s income tax rates range from 2% to 6.99%, depending on income levels.
Minnesota
Minnesota offers a state subtraction for Social Security benefits, fully exempting them for married couples with AGIs up to $105,380 and single filers up to $82,190 in 2025. Beyond these thresholds, the subtraction phases out, and higher-income retirees may pay state taxes on up to 85% of their benefits.
Approximately 29% of Minnesota residents receiving Social Security benefits are subject to state taxation.
Montana
The State of Montana taxes Social Security benefits for single filers with adjusted gross incomes (AGIs) between $25,000 and $34,000. Retirees earning above $34,000 may have up to 85% of their benefits taxed as per the federal law.
As of 2025, Montana residents aged 65 and older can subtract $5,500 from their Montana taxable income. However, this subtraction may not fully offset the state tax on Social Security benefits, potentially resulting in double taxation for some retirees.
New Mexico
Starting in tax year 2022, New Mexico began exempting Social Security benefits from state income tax for most seniors, offering up to $84.1 million in annual relief for individuals earning under $100,000 and couples under $150,000.
This change removes previous income caps, ensuring that retirees are no longer subject to double taxation on their benefits.The exemption applies to all filers, including single, married, and heads of household. This policy shift is expected to provide significant tax relief to New Mexico seniors.
Rhode Island
Rhode Island offers a partial exemption on Social Security income based on age and adjusted gross income, reducing the tax burden for many retirees but not eliminating it.
Taxpayers exceeding their income thresholds may have up to 85% of their benefits taxed at rates ranging from 3.75% to 5.99%, potentially resulting in double taxation. This structure underscores the importance of income planning for retirees in the state.
Utah
As of 2025, Utah imposes a flat income tax rate of 4.55% on Social Security benefits. Utah taxes Social Security benefits for individuals earning over $37,000 and couples over $62,000, potentially leading to double taxation for higher-income retirees.
Governor Cox’s 2026 budget proposes eliminating this tax, aiming to save approximately $950 annually for each of 150,000 seniors. However, until enacted, retirees exceeding these income thresholds remain subject to both federal and state taxes on their benefits.
Vermont
Vermont offers a full exemption on federally taxable Social Security benefits for single filers with adjusted gross incomes (AGIs) up to $50,000 and married joint filers up to $65,000. The exemption phases out between $50,001–$59,999 for single filers and $65,000–$75,000 for joint filers. Taxpayers exceeding these thresholds may face double taxation, as up to 85% of their benefits could be taxed federally and by the state.
West Virginia
In 2025, West Virginia exempts 65% of Social Security benefits from state income tax for residents with federal adjusted gross incomes over $50,000 (single) or $100,000 (joint). This is part of a phased plan initiated by House Bill 4880, aiming for full exemption by 2026.
Until then, higher-income retirees may face double taxation on the remaining taxable portion of their benefits. This phased approach is designed to alleviate the tax burden on seniors while maintaining state revenue.
Kansas
As of 2025, Kansas exempts all Social Security benefits from state income tax for residents with an adjusted gross income (AGI) of $75,000 or less, regardless of filing status. Retirees exceeding this threshold may have up to 85% of their benefits taxed at rates ranging from 3.1% to 5.7%, aligning with federal taxation rules. This structure can result in double taxation for higher-income retirees.
