41 States Won’t Tax Social Security in 2025, Is Yours on the List?

In 2025, the majority of U.S. states will not tax Social Security benefits, delivering a significant financial relief to millions of retirees. A total of 41 states, plus Washington, D.C., have chosen either to fully exempt Social Security income from taxation or avoid state income tax altogether. This policy shift provides critical support for seniors as the cost of living continues to rise nationwide.

While federal law still allows up to 85% of Social Security income to be taxed at the federal level, state rules vary. In fact, only nine states will continue taxing benefits in 2025, and even in these cases, the impact depends on income thresholds and exemptions.

Taxation Still Applies in Nine States

Although the national trend is toward full exemption, a handful of states still tax Social Security, either in full or partially. Each state applies its own formula:

• Colorado: Full exemption for those 65+, partial for those 55–64 depending on income.
• Connecticut: Exempts benefits below \$75,000 (single) or \$100,000 (joint); taxes above those limits.
• Minnesota: Offers a subtraction system; higher earners lose eligibility.
• Montana: Applies regular state income tax, with only small deductions.
• New Mexico: Exempts lower incomes, taxes higher thresholds.
• Rhode Island: Grants exemption if income is below state-set limits.
• Utah: Mirrors federal rules but offsets with state-level credits.
• Vermont: Exempts up to \$50,000 (single) or \$65,000 (joint); partial taxation above.
• West Virginia: Still taxes partially in 2025 but will fully exempt Social Security by 2026.

These tax rules affect retirees unevenly. Lower-income households typically pay no state tax, while higher earners may still see deductions from their benefits.

States Offering Full Social Security Tax Exemption

By contrast, most states now allow retirees to keep their full Social Security checks. These states fall into two groups:

• No State Income Tax at All: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming.
• States with Income Tax but Full Social Security Exemption: Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, Wisconsin.

Washington, D.C. also provides a full exemption. This widespread relief makes these areas particularly attractive for retirees managing tight budgets.

Recent Changes in State Tax Laws

The trend toward exemption is accelerating. Several states recently updated their laws:

• Missouri: Ended Social Security taxation in 2024.
• Nebraska: Completed its phase-out in 2025.
• Kansas: Followed with similar legislation in 2025.
• West Virginia: On track to eliminate its tax entirely by 2026.

These legislative changes are often framed as a direct response to inflation and rising senior poverty rates, with lawmakers arguing that retirees deserve to keep more of their limited income.

Financial Impact for Retirees

For retirees, the difference between living in a state that taxes benefits and one that doesn’t is substantial.

• A retiree receiving \$30,000 annually in Social Security could save \$1,500 per year in a state with a 5% income tax by relocating to one that exempts benefits.
• At the state level, the savings are massive. Missouri retirees saved an estimated \$309 million annually once the tax was eliminated. In Nebraska, the figure was around \$17 million annually.

These savings often go directly toward essentials like housing, healthcare, and groceries—areas where older Americans feel the squeeze most.

The Bigger Picture

With 41 states now protecting Social Security benefits from state taxes, retirees in most of the country enjoy full access to their earned benefits. However, in the nine remaining states, ongoing debates suggest that reforms may still come in the next few years.

For seniors planning retirement or considering relocation, understanding state-level Social Security tax rules is just as important as knowing about federal benefits.

FAQs

1. Do all states tax Social Security benefits?
No. In 2025, only nine states apply some level of taxation on Social Security benefits. The majority of states fully exempt them.

2. Which states are the most retiree-friendly in terms of Social Security taxes?
States with no income tax, such as Florida, Texas, and Nevada, and states that exempt Social Security, like California, New York, and Virginia, are the most favorable.

3. How much could retirees save by living in a state that doesn’t tax Social Security?
Savings can range from hundreds to thousands of dollars annually, depending on the state tax rate and the retiree’s Social Security income.

4. Are there upcoming changes in states that still tax Social Security?
Yes. West Virginia will phase out taxation by 2026, and other states are considering similar legislation.

5. Does the federal government still tax Social Security benefits?
Yes. At the federal level, up to 85% of Social Security income can be taxed depending on combined income.