9 States Tax Social Security While Florida Stays Tax-Free for Retirees!

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When planning where to retire, Florida often comes up as one of the top choices. And for good reason! The Sunshine State has warm weather all year round, without the extreme summer heat of places like Arizona. But there’s another major perk that makes Florida appealing to retirees: no state tax on Social Security benefits.

However, not every state is as tax-friendly. While everyone still pays federal tax on Social Security benefits, residents of nine states face an extra state tax. Depending on where you live and how much you earn, this extra tax can range from 1.7% to 9.85%.

The good news? Some states are starting to ease up on these taxes. For now, let’s take a closer look at the nine states that tax Social Security and what you can expect if you live there.

Which 9 States Tax Social Security?

Here are the states that tax Social Security benefits, listed alphabetically:

1. Colorado
2. Connecticut
3. Minnesota
4. Montana
5. New Mexico
6. Rhode Island
7. Utah
8. Vermont
9. West Virginia

The other 41 states, including Florida, don’t tax Social Security benefits. Washington, D.C., is also tax-free for Social Security.

Let’s break down the rules for each of these nine states.

1. Colorado

Colorado has a state income tax of 4.4%. But there’s good news for retirees:

• Starting 2025, seniors aged 65 and older won’t have to pay state taxes on Social Security.
• If you’re younger than 65, you’re still exempt from Social Security tax if your income is $75,000 or less (single) or $95,000 or less (jointly).

2. Connecticut

Connecticut has a sliding income tax ranging from 2% to 6.99%. Here’s how it works:

• If you make $75,000 or less as an individual, your Social Security benefits are fully tax-free.
• For couples filing jointly, the limit is $100,000.
• Even if you earn above those limits, only 25% of your benefits are taxed.

3. Minnesota

Minnesota’s income tax rate is one of the highest, ranging from 5.35% to 9.85%. However:

• If you earn $82,190 or less (single) or $105,380 or less (jointly), you can avoid state tax on Social Security.
• Higher earners may still qualify for a partial tax break.

4. Montana

Montana taxes Social Security benefits for lower-income retirees:

• Single filers earning $25,000 or less are exempt.
• Joint filers earning $32,000 or less are also exempt.
• If you earn above those amounts, you’ll still pay taxes, but only on a portion of your benefits.
• Montana’s tax rate ranges between 4.7% and 5.9%.

5. New Mexico

New Mexico’s income tax ranges from 1.7% to 5.9%. The state is more forgiving to higher earners:

• Single filers earning up to $100,000 can be fully exempt from their Social Security benefits.
• Joint filers can earn up to $150,000 and still avoid state taxes.

6. Rhode Island

Rhode Island has one of the smallest tax impacts on retirees:

• Tax rates range from 3.75% to 5.99%.
• Single filers earning up to $101,000 are exempt.
• For joint filers, the limit is $126,250.

7. Utah

Utah offers plenty of scenic beauty, but it taxes Social Security at a flat rate of 4.55%:

• Single filers earning less than $45,000 are fully exempt.
• Joint filers earning up to $75,000 also avoid state tax.
• Higher earners still receive partial tax breaks.

8. Vermont

Vermont is known for its picturesque landscapes, but it taxes Social Security at rates between 3.35% and 8.75%:

• Single filers with an income of $50,000 or less are exempt.
• Joint filers earning $65,000 or less also pay no tax.
• Higher earners pay taxes on a portion of their benefits.

9. West Virginia

West Virginia is phasing out its Social Security tax:

• Currently, residents can deduct 35% of their Social Security benefits.
• By 2025, the deduction increases to 65%.
• Starting in 2026, Social Security benefits will be completely tax-free.

What Retirees Should Keep in Mind

While Florida and most other states don’t tax Social Security, that doesn’t mean they’re automatically the cheapest places to live. Other factors like property taxes, sales taxes, and energy costs can also increase the cost of living.

If you’re planning for retirement, it’s important to look at the full financial picture. For example, states with no Social Security tax might have higher housing costs or other taxes that balance things out.

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