Bree-Anna Burick Aug 9, 2024 3 min read

These States Won't Tax Social Security Starting in 2025

Credit: Adobe Stock

Social Security is a vital income source for many retirees, but the amount you ultimately keep can vary significantly based on where you live.

While the federal government taxes Social Security benefits for some, the impact of state taxes can be even more substantial.

The Growing Trend of Tax-Free Social Security

A growing number of states are recognizing the importance of Social Security for retirees and have taken steps to exempt these benefits from state income taxes.

This trend provides significant financial relief for seniors and can make a substantial difference in their retirement lifestyle.

Factors Affecting State Taxation of Social Security

Several factors influence whether a state taxes Social Security benefits:

  • State Revenue Needs: States facing budget shortfalls may be more inclined to tax additional income sources, including Social Security benefits.

  • Political Climate: The political landscape of a state can influence decisions about taxing Social Security.

  • Demographic Factors: States with a large retiree population may be more likely to exempt Social Security benefits to attract residents.

Credit: Adobe Stock

States That Tax Social Security Benefits

As of 2025, only nine states tax Social Security benefits:

  • Colorado

  • Connecticut

  • Minnesota

  • Montana

  • New Mexico

  • Rhode Island

  • Utah

  • Vermont

  • West Virginia

It's important to note that even within these states, there may be exemptions or deductions available for certain taxpayers, such as those with low incomes or specific age groups.

States That Don't Tax Social Security Benefits

The majority of states have chosen not to tax Social Security benefits, providing significant tax relief for retirees.

These states include:

  • 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

Credit: Adobe Stock

The Impact of Tax-Free Social Security Benefits

The decision to exempt Social Security benefits from state income taxes can have a substantial impact on retirees' finances.

By eliminating this tax burden, states can improve the quality of life for seniors and attract retirees to their communities. This can also stimulate local economies as retirees have more disposable income to spend.

Planning for Retirement

When planning for retirement, it's essential to consider the potential tax implications of different states. While Social Security taxes are one factor, other state taxes, such as property taxes and sales taxes, can also impact your overall financial situation.

Consulting with a financial advisor can help you navigate the complexities of state taxes and develop a comprehensive retirement plan.

By understanding the tax landscape in different states, you can make informed decisions about where to retire and how to maximize your retirement income.

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