For retirees, Social Security benefits are a lifeline, but in some parts of the country, they’re still subject to state taxation. While most states have eliminated these taxes to protect seniors, there remain a handful holding onto the policy. Knowing which places are included in the nine states still taxing Social Security in 2025 is critical for anyone planning where to live in retirement. These taxes can significantly impact your budget, especially if you rely heavily on fixed income. Understanding how each state handles Social Security helps you prepare financially and decide if relocation makes sense.
1. Colorado
Colorado continues to tax Social Security benefits, though it does offer deductions for certain income levels. The state allows exemptions for retirees over a certain age, but many still find themselves owing taxes. This makes it one of the nine states still taxing Social Security in 2025 despite efforts to soften the blow. Retirees need to carefully calculate their income to understand how much is taxable. For those with higher pensions or savings, Colorado’s tax laws may have a bigger impact.
2. Connecticut
Connecticut has been reducing its taxation of Social Security, but not everyone qualifies for the full exemption. Lower and middle-income retirees may see relief, while higher-income households still pay. As part of the nine states still taxing Social Security in 2025, Connecticut highlights how rules can vary depending on earnings. Seniors planning to stay here should monitor income thresholds closely. A small bump in income could mean paying taxes unexpectedly.
3. Minnesota
Minnesota is known for having some of the highest taxes in the country, and Social Security is no exception. Although the state provides some credits and deductions, many seniors still end up paying. Being one of the states still taxing Social Security in 2025 makes Minnesota less attractive for retirees seeking to stretch their income. While benefits like healthcare access may offset the cost, taxation remains a burden. Seniors here should factor taxes into their overall retirement budget.
4. Montana
Montana applies state income taxes to Social Security benefits for residents above certain income levels. Similar to federal rules, the state taxes a portion of benefits based on combined income. That places it among the states still taxing Social Security in 2025. Retirees considering Montana for its natural beauty should weigh these costs carefully. While property taxes are relatively low, Social Security taxation can reduce the savings.
5. New Mexico
New Mexico has been working to phase out Social Security taxation, but as of 2025, it hasn’t fully disappeared. Certain income thresholds still trigger taxes for retirees. That’s why it remains one of the nine states still taxing Social Security in 2025. Retirees in New Mexico should review whether they qualify for available exemptions. While progress is being made, the policy hasn’t completely gone away.
6. Rhode Island
Rhode Island exempts many lower-income retirees from Social Security taxes, but not all. Higher-income households still face taxation. As a result, it’s included in the nine states still taxing Social Security in 2025. Seniors need to watch their taxable income carefully to avoid surprises. With New England’s already high living costs, these taxes can add to the financial strain.
7. Utah
Utah taxes Social Security benefits but provides credits to reduce the impact for some households. The credits are based on income levels, meaning retirees with higher incomes may not benefit. This keeps Utah on the list of states still taxing Social Security in 2025. For retirees balancing savings and pensions, it’s important to calculate how much relief they actually qualify for. Without planning, the tax hit may be more than expected.
8. Vermont
Vermont applies state income taxes to Social Security for residents above a certain income level. The thresholds determine how much of the benefit is taxable, leaving some retirees unaffected while others pay significantly. Its presence among the states still taxing Social Security in 2025 shows the inconsistency across states. Vermont retirees need to keep close tabs on their income to predict tax obligations. The system rewards lower earners but penalizes those with added retirement savings.
9. West Virginia
West Virginia has gradually reduced its taxation on Social Security but not eliminated it. For 2025, retirees above specific income levels still pay taxes. That places it firmly among the nine states still taxing Social Security in 2025. The good news is the state continues to explore reforms, but for now, retirees must budget accordingly. Careful planning ensures Social Security income goes further even with taxes applied.
Choosing Where to Retire with Taxes in Mind
Deciding where to retire isn’t just about climate and lifestyle—it’s also about how much of your income you get to keep. The reality is that nine states still taxing Social Security in 2025 create challenges for retirees who depend on every dollar. While exemptions and credits soften the impact, taxes still add up over time. By staying informed and comparing options, retirees can make smarter choices about where to live. Ultimately, understanding the rules before retirement begins helps avoid financial surprises later.
Do you live in one of the states still taxing Social Security? Share how it impacts your retirement planning in the comments below!
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