Despite millions of Americans not facing taxes on their Social Security benefits, tax regulations at both federal and state levels can still diminish the payments that retirees receive. As of 2025, nine states impose taxes on Social Security benefits, although this number may decrease, with Utah being the latest to consider abolishing its tax.
This trend is gaining traction. During his campaign last year, former President Donald Trump pledged to eliminate federal taxes on Social Security, which affect approximately 40% of the 70 million monthly beneficiaries. However, enacting this change would require Congressional support, while states have the autonomy to make their own decisions regarding taxation.
Criticism of state taxes on Social Security has grown in recent years. Advocates argue these taxes unjustly reduce the benefits that individuals have earned and deserve. They also contend that removing or lowering state taxes on Social Security can assist seniors in managing the rising cost of living. Given the recent inflation rates, many recipients find it challenging to cover basic expenses, with nearly one-third of retired Americans contemplating rejoining the workforce.
This advocacy has seen success in various states. Recently, Kansas and West Virginia enacted legislation to eliminate or phase out taxes on Social Security benefits.
Utah’s Governor Spencer Cox, a Republican re-elected in November, is now advocating for the removal of the state tax on Social Security benefits, which he has labeled as his "most popular proposal" in years. The change could potentially save some families close to $1,000 annually. Currently, some Social Security benefits in Utah are subject to a 4.55% income tax, although low-income households can fully offset this with a tax credit.
If Utah’s lawmakers approve this change during the 2026 budget discussions, it would leave a small number of states with ongoing taxation of Social Security benefits. Here’s a summary of those states as of 2025:
Colorado
In Colorado, which has a state income tax rate of 4.4%, only certain Social Security recipients are taxed. Individuals aged 65 and older can deduct their Social Security benefits, and taxpayers aged 55 to 64 can do so under specific income conditions. Some younger beneficiaries may also have to pay taxes.
Connecticut
In Connecticut, only those with an adjusted gross income exceeding $75,000 for individuals or $100,000 for couples are taxed on their Social Security benefits. Nevertheless, 75% of these benefits are exempt from state taxes.
Minnesota
In Minnesota, married couples filing jointly can avoid taxes if their income is below $108,320; for single filers, the threshold is $84,490. Although higher-income residents may still pay taxes, some state lawmakers are looking to abolish the taxation entirely.
Montana
Montana taxes Social Security benefits for individuals earning over $25,000 and married couples over $32,000. Deductions are available for higher earners, but a 2023 effort to eliminate this tax did not succeed.
New Mexico
Most taxpayers in New Mexico are exempt from state taxes on Social Security due to legislation passed in 2022, allowing singles earning under $100,000 and married couples under $150,000 to fully deduct benefits. Those exceeding these income thresholds may face taxes ranging from 1.7% to 5.9%.
Rhode Island
In Rhode Island, residents do not have to pay taxes on their Social Security benefits if they are at full retirement age and their income is below a specified limit ($104,200 for single filers in 2024). Others will incur taxes ranging from 3.75% to 5.99%.
Vermont
Vermont generally does not tax benefits for individuals with incomes below $50,000 and married couples below $65,000. Taxation applies to those exceeding these thresholds, particularly for individuals over $60,000 and couples over $75,000. A bipartisan legislative effort is underway to raise these income limits.
West Virginia
West Virginia is on track to eliminate taxes on Social Security benefits soon. Higher earners already received a 65% reduction in these taxes under recent legislation, with full elimination slated for 2026.
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