It’s becoming less common for states to tax Social Security benefits, but nine states still do (down from eleven last year). However, the tax treatment of Social Security retirement income can vary drastically from state to state. That’s mainly because many of these states won’t tax your Social Security if you meet specific income guidelines, and some states have more generous guidelines than others.
So, here’s how all nine states tax Social Security retirement income.
Colorado taxes Social Security benefits, but some retirees won't have to pay. That’s because Colorado now allows taxpayers 65 and older to deduct all their federally taxed Social Security up to $24,000. (Younger retirees, those under age 65, get a smaller tax break in Colorado.)
- Retirees age 55 to 64 can deduct up to $20,000 of Social Security benefits from their taxable income.
- Colorado taxes all taxable income at a flat 4.25% rate (for the 2024 tax year).
Note: Colorado recently passed a new bill. Starting in 2025, retirees age 55-64 will be able to deduct up to $75,000 of Social Security benefits from their taxable income.
While Connecticut technically still taxes Social Security benefits, many residents won’t pay these state taxes in retirement. Whether you pay state income tax on Social Security in the Constitution State depends on your adjusted gross income (AGI) and your filing status.
- For married filing separately and single filers, Social Security benefits are not taxed in Connecticut if adjusted gross income (AGI) is under $75,000.
- For married filing jointly and head of household filers, Social Security benefits are not taxed with AGI below $100,000.
- If a taxpayer’s AGI is more than the Connecticut income threshold, no more than 25% of Social Security benefits are taxed.
Minnesota taxes Social Security income that is considered taxable by the federal government. However, some Minnesota retirees qualify for a Social Security income subtraction when filing their state tax return. A taxpayer's subtraction is reduced by 10% for each $4,000 over the threshold (10% for each $2,000 of AGI over $50,000 for married filing separately).
Here are the threshold amounts subject to no social security tax, according to the Minnesota Department of Revenue:
- Married filing jointly filers are fully tax-exempt at $105,380 or less.
- If you are married and filing separately, you are fully tax-exempt at $52,960 or less.
- Head of household and single filers are tax-exempt at $82,190 or less.
You must meet income requirements to qualify for the amounts above.
(Note: Minnesota also has an "alternative method" for claiming a state subtraction. This method is based on the income thresholds on provisional income, which is your federal AGI plus tax-exempt interest and half of Social Security and Tier 1 Railroad Retirement benefits.)
Montana’s income tax rate is 5.9% on income over $41,000 ($20,500 for single filers). That’s not great news for some retirees since the treatment of Social Security retirement income isn't as generous in Montana for 2024 as it is in most states.
- Taxpayers 65 and only receive a $5,500 subtraction from federal taxable income.
- Several income deductions, including the partial interest income deduction for taxpayers aged 65 or older, are repealed for the 2024 tax year.
New Mexico technically taxes Social Security benefits, but many retirees won’t pay a dime to the state at tax time. That’s because legislation passed last year provides higher income thresholds for exempting Social Security benefits.
- Single filers earning up to $100,000 per year won’t have their Social Security benefits taxed at the state level.
- New Mexico won’t tax Social Security benefits for joint filers who earn up to $150,000 per year.
Rhode Island exempts Social Security benefits from state income tax for many retirees. Retirees who have reached full retirement age and meet income requirements aren't subject to state tax on Social Security benefits. Here are the most recent income thresholds:
- For joint filers, only those with an AGI of 126,250 or more are subject to state tax on Social Security benefits.
- For most other filing statuses, only retirees with a federal AGI less than $101,000 pay state taxes on Social Security benefits.
Utah taxes Social Security benefits, but some retirees may qualify for a Social Security benefits credit. There is a Social Security Credit Worksheet on the state’s website you can use to determine the amount of the credit you qualify for.
- Utah also offers a retirement tax credit of $450, but taxpayers can’t take this credit if they claim the Social Security benefits credit.
- Utah taxes all taxable income at a flat 4.55% tax rate.
Not all retirees in Vermont pay state income tax on Social Security benefits. That’s because Vermont allows a full exemption of Social Security income from state taxation for retirees who meet income requirements. Here are the income thresholds for 2024:
- If you are married and filing jointly, your Social Security benefits are tax-exempt in Vermont if your AGI is $65,000 or less.
- Single and married filing separately filers qualify for a full exemption with an AGI of $50,000 or less.
- Single filers qualify for a partial exemption with an AGI up to $59,999 ($74,999 for joint filers).
West Virginia barely makes the list of states that tax Social Security benefits. That's because the Mountain State is phasing out its benefit taxes by subtracting a discount from adjusted gross income (AGI).
Here are the subtractions for the next three tax years:
- In 2024, 35% of SS benefits can be subtracted from AGI.
- In 2025, 65% of SS benefits can be subtracted from AGI.
- In 2026, 100% of SS benefits can be subtracted from AGI.
For more information, visit the West Virginia Tax Division's website.
