{"id":216,"date":"2024-12-20T02:33:06","date_gmt":"2024-12-20T02:33:06","guid":{"rendered":"https:\/\/www.soscip.org\/us\/?p=216"},"modified":"2024-12-20T02:33:07","modified_gmt":"2024-12-20T02:33:07","slug":"social-security-us-states-wont-tax-benefits-2025","status":"publish","type":"post","link":"https:\/\/www.soscip.org\/us\/social-security-us-states-wont-tax-benefits-2025\/","title":{"rendered":"Keep More of Your Social Security: 41 States That Won\u2019t Tax Benefits in 2025"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Social Security serves as a lifeline for millions of retired Americans, with 40% of those aged 65 and older relying on it for at least half of their income, according to the AARP. However, where you live significantly affects how much of your Social Security income you can keep. While federal taxes can take up to 85% of your benefits based on your income, state-level taxation varies widely. Fortunately, the majority of states in the U.S. do not tax Social Security benefits, and that number will grow in 2025.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2>Table of Contents<\/h2><nav><ul><li><a href=\"#the-shrinking-list-of-states-that-tax-social-security\">The Shrinking List of States That Tax Social Security<\/a><\/li><li><a href=\"#41-states-that-wont-tax-social-security-in-2025\">41 States That Won\u2019t Tax Social Security in 2025<\/a><\/li><li><a href=\"#how-much-can-retirees-save-in-these-states\">How Much Can Retirees Save in These States?<\/a><\/li><li><a href=\"#special-exemptions-in-taxing-states\">Special Exemptions in Taxing States<\/a><\/li><li><a href=\"#what-this-means-for-retirees\">What This Means for Retirees<\/a><\/li><li><a href=\"#final-thoughts-retirees-are-winning-the-tax-battle\">Final Thoughts: Retirees Are Winning the Tax Battle<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"the-shrinking-list-of-states-that-tax-social-security\"><strong>The Shrinking List of States That Tax Social Security<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As of 2025, only <strong>nine states<\/strong> will continue to tax Social Security benefits:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Colorado<\/li>\n\n\n\n<li>Connecticut<\/li>\n\n\n\n<li>Minnesota<\/li>\n\n\n\n<li>Montana<\/li>\n\n\n\n<li>New Mexico<\/li>\n\n\n\n<li>Rhode Island<\/li>\n\n\n\n<li>Utah<\/li>\n\n\n\n<li>Vermont<\/li>\n\n\n\n<li>West Virginia<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The good news? <strong>Kansas, Missouri, and Nebraska<\/strong> have eliminated Social Security taxes. Missouri and Nebraska stopped taxing these benefits in 2024, and Kansas followed suit with a new law enacted mid-2024. Additionally, West Virginia plans to phase out Social Security taxes entirely by 2026.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cEach state has unique tax rules,\u201d said Brian Kuhn, CFP, SVP at Wealth Enhancement Group. \u201cThese include deductions for individuals below certain income thresholds or ages, making taxation levels highly specific to your circumstances.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"41-states-that-wont-tax-social-security-in-2025\"><strong>41 States That Won\u2019t Tax Social Security in 2025<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s the list of states (plus Washington, D.C.) where Social Security benefits will remain tax-free:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Alabama<\/strong><\/li>\n\n\n\n<li><strong>Alaska<\/strong><\/li>\n\n\n\n<li><strong>Arizona<\/strong><\/li>\n\n\n\n<li><strong>Arkansas<\/strong><\/li>\n\n\n\n<li><strong>California<\/strong><\/li>\n\n\n\n<li><strong>Delaware<\/strong><\/li>\n\n\n\n<li><strong>Florida<\/strong><\/li>\n\n\n\n<li><strong>Georgia<\/strong><\/li>\n\n\n\n<li><strong>Hawaii<\/strong><\/li>\n\n\n\n<li><strong>Idaho<\/strong><\/li>\n\n\n\n<li><strong>Illinois<\/strong><\/li>\n\n\n\n<li><strong>Indiana<\/strong><\/li>\n\n\n\n<li><strong>Iowa<\/strong><\/li>\n\n\n\n<li><strong>Kansas<\/strong><\/li>\n\n\n\n<li><strong>Kentucky<\/strong><\/li>\n\n\n\n<li><strong>Louisiana<\/strong><\/li>\n\n\n\n<li><strong>Maine<\/strong><\/li>\n\n\n\n<li><strong>Maryland<\/strong><\/li>\n\n\n\n<li><strong>Massachusetts<\/strong><\/li>\n\n\n\n<li><strong>Michigan<\/strong><\/li>\n\n\n\n<li><strong>Mississippi<\/strong><\/li>\n\n\n\n<li><strong>Missouri<\/strong><\/li>\n\n\n\n<li><strong>Nebraska<\/strong><\/li>\n\n\n\n<li><strong>Nevada<\/strong><\/li>\n\n\n\n<li><strong>New Hampshire<\/strong><\/li>\n\n\n\n<li><strong>New Jersey<\/strong><\/li>\n\n\n\n<li><strong>New York<\/strong><\/li>\n\n\n\n<li><strong>North Carolina<\/strong><\/li>\n\n\n\n<li><strong>North Dakota<\/strong><\/li>\n\n\n\n<li><strong>Ohio<\/strong><\/li>\n\n\n\n<li><strong>Oklahoma<\/strong><\/li>\n\n\n\n<li><strong>Oregon<\/strong><\/li>\n\n\n\n<li><strong>Pennsylvania<\/strong><\/li>\n\n\n\n<li><strong>South Carolina<\/strong><\/li>\n\n\n\n<li><strong>South Dakota<\/strong><\/li>\n\n\n\n<li><strong>Tennessee<\/strong><\/li>\n\n\n\n<li><strong>Texas<\/strong><\/li>\n\n\n\n<li><strong>Virginia<\/strong><\/li>\n\n\n\n<li><strong>Washington<\/strong><\/li>\n\n\n\n<li><strong>Wisconsin<\/strong><\/li>\n\n\n\n<li><strong>Wyoming<\/strong><\/li>\n\n\n\n<li><strong>Washington, D.C.<\/strong><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-much-can-retirees-save-in-these-states\"><strong>How Much Can Retirees Save in These States?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The savings for retirees in states without Social Security taxes can be significant. For example, if your state\u2019s effective income tax rate is 5% and you receive $30,000 in annual Social Security benefits, you could save <strong>$1,500<\/strong> annually in taxes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cIn states like Missouri, retirees collectively save an estimated $309 million annually by avoiding Social Security taxes,\u201d said Jeff Rose, CFP, founder of Good Financial Cents. \u201cIn Nebraska, the figure is around $17 million. This money stays in retirees\u2019 pockets instead of going to state coffers.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"special-exemptions-in-taxing-states\"><strong>Special Exemptions in Taxing States<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Even in the nine states that tax Social Security, many retirees may qualify for exemptions or deductions. For instance:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Colorado:<\/strong> Residents aged 65+ can fully deduct federally taxed Social Security benefits. In 2025, this exemption will extend to those aged 55\u201364, provided their adjusted gross income (AGI) is $75,000 or less for individuals or $95,000 or less for couples filing jointly.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Understanding these exemptions is crucial to accurately calculate potential tax liabilities.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.soscip.org\/us\/new-wave-700-stimulus-checks-whats-next-for-2025\/\" data-type=\"post\" data-id=\"71\">New Wave of $700+ Stimulus Checks: Who Qualifies and What\u2019s Next for 2025?<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.soscip.org\/us\/medicare-hidden-costs-10-expenses-to-pay\/\" data-type=\"post\" data-id=\"86\">Medicare\u2019s Hidden Costs: 10 Expenses You\u2019ll Have to Pay Out-of-Pocket<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.soscip.org\/us\/warm-relief-new-yorkers-996-heap-stimulus-checks\/\" data-type=\"post\" data-id=\"128\">Warm Relief for New Yorkers: $996 HEAP Stimulus Checks to Combat Winter Costs this Christmas<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.soscip.org\/us\/social-security-major-changes-coming-in-2025\/\" data-type=\"post\" data-id=\"28\">Social Security Shake-Up: Major Changes Coming in 2025 \u2014 Are You Affected?<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.soscip.org\/us\/the-medicare-advantage-trap-health-and-wealth\/\" data-type=\"post\" data-id=\"100\">The Medicare Advantage Trap: What They\u2019re Not Telling You About Your Health and Wealth<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-this-means-for-retirees\"><strong>What This Means for Retirees<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The decision of where to retire can significantly impact your financial security. States without Social Security taxes provide a more retiree-friendly environment, allowing residents to stretch their benefits further. However, even in states with taxes, exemptions and deductions often soften the blow for lower-income individuals or older residents.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To maximize your retirement income:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Research State Tax Laws:<\/strong> Understand how your state handles Social Security and other retirement income.<\/li>\n\n\n\n<li><strong>Plan for Tax Changes:<\/strong> Be aware of future tax law changes, like those in West Virginia, which will stop taxing Social Security by 2026.<\/li>\n\n\n\n<li><strong>Work with a Financial Advisor:<\/strong> Tailored advice can help minimize your tax burden and optimize retirement income.<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"final-thoughts-retirees-are-winning-the-tax-battle\"><strong>Final Thoughts: Retirees Are Winning the Tax Battle<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">With the list of states taxing <a href=\"https:\/\/www.soscip.org\/us\/social-security-us-states-wont-tax-benefits-2025\/\" data-type=\"link\" data-id=\"https:\/\/www.soscip.org\/us\/social-security-us-states-wont-tax-benefits-2025\/\">Social Security benefits shrinking<\/a>, most Americans will keep more of their retirement income in 2025. As tax laws continue to evolve, staying informed and proactive can ensure you make the most of your Social Security benefits\u2014no matter where you live.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Social Security serves as a lifeline for millions of retired Americans, with 40% of those aged 65 and older relying on it for at least half of their income, according to the AARP. However, where you live significantly affects how much of your Social Security income you can keep. While federal taxes can take up&nbsp;<a class=\"read-more\" href=\"https:\/\/www.soscip.org\/us\/social-security-us-states-wont-tax-benefits-2025\/\">Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":221,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[7,5,6],"class_list":["post-216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-social-security","tag-social-security-administration","tag-social-security-benefits","tag-social-security-news"],"_links":{"self":[{"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/posts\/216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/comments?post=216"}],"version-history":[{"count":6,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/posts\/216\/revisions"}],"predecessor-version":[{"id":1244,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/posts\/216\/revisions\/1244"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/media\/221"}],"wp:attachment":[{"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/media?parent=216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/categories?post=216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soscip.org\/us\/wp-json\/wp\/v2\/tags?post=216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}