Social Security benefits make a big difference in the wallets of many Americans.
But these extra dollars can be a double-edged sword: While the additional dollars may close the gap on affordability this year, the benefit can increase your household income, meeting the threshold to pay taxes on those earnings.
The federal government taxes Social Security earnings if you’re receiving retirement, survivor and disability benefits and your home makes a certain amount of money. But a select number of states tax that income for 2025, too. Nebraska is one state that dropped this tax for 2025. And in the tax year 2026, West Virginia will also stop taxing these earnings.
Here’s which states will tax your Social Security earnings and how to make the most of your dollar.
Will your state tax your Social Security earnings?
Here are nine states that tax Social Security earnings for tax year 2025:
Colorado: For Social Security recipients aged younger than 65, the first $20,000 of their benefits are not taxable by the state. If you’re 65 or older, you won’t be taxed on any of your Social Security earnings. There is a change for 2025 — those 55 to 64 can take the full deduction of up to $24,000.
Connecticut: If your adjusted gross income (AGI) is below $75,000 for single filers and $100,000 for married joint filers, they aren’t aren’t taxed on their benefits. However, if your income tops those thresholds, 25% of your benefits may be taxed.
Minnesota: Social Security benefits are fully or partially exempt from Minnesota’s income tax. Exemptions phase out at $108,320 if married and filing jointly or $84,490 for singles.
Montana: Your AGI will determine how much tax you pay on your Social Security benefits.
New Mexico: Most Social Security recipients in New Mexico don’t pay tax on their earnings. Single taxpayers with incomes below $100,000, married filing jointly couples earning less than $150,000, and married filing separately couples below $75,000 are exempt from Social Security tax.
Rhode Island: If your income exceeds $107,000 for single filers or $133,750 if you’re filing jointly, or if you’re younger than what Social Security considers full retirement age, you get no tax break.
Utah: Your benefits will be taxed if your income is $54,000 or more, $90,000 or more if you’re head of household or married filing jointly, or $45,000 if married filing separately. Below those thresholds, you may be able to claim a nonrefundable credit for your benefits.
Vermont: Single taxpayers with AGI below $50,000 and joint filers with AGI below $65,000 don’t pay any tax on their benefits. For all other filers, the income threshold for the full exemption is $50,000. The exemption phases out beyond those levels.
West Virginia: This year marks expansions so all West Virginia Social Security recipients may qualify for exemptions. For taxable years beginning on or after January 1, 2025, 65% of the amount of Social Security benefits received and included in federal AGI may be subtracted.
Is there a way to avoid taxes on Social Security?
Social Security benefit can make a big difference for Americans cost of living, so paying taxes on that additional money can be frustrating and stress budgets.
But these taxes are avoidable with a few things in mind: First, your state may not tax your Social Security benefits at all, meaning you don’t have to worry about the extra filing.
If you are in a state that does tax, think about your state’s AGI threshold for taxation, tax experts say. If you are below that AGI, you may be able to avoid tax requirements.
Also, consider when you start Social Security benefits: If your income allows, some Americans prefer to delay collecting Social Security to maximize checks and avoid taxation.
What is an SSA-1099 form and how do you get it?
To help you figure out how much you received in benefits over the course of the year, the Social Security Administration should send you a form in January.
This is your Social Security Benefit Statement, or SSA-1099, and can be used to figure out how much you owe when you are filing your federal tax return.
Contributing: Medora Lee, Andrea Riquier
This article originally appeared on USA TODAY: Most states don’t tax Social Security, but some still do. See a list.
Reporting by Nicole Fallert, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
