How State Taxes Might Reduce Your Social Security Check
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Jordan Rosenfeld
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Molly Sullivan
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Many retirees are surprised to learn that Social Security benefits aren’t always tax-free. Depending on where you live and how much income you bring in, part of your check could go to state taxes.
The rules vary widely by state and income level, which means your location can play a big role in how much retirement income you actually get to keep. Knowing the thresholds ahead of time can help you plan smarter.
Understand State Tax Rules
Before you file for Social Security, take time to learn your state’s tax rules, since not every state taxes benefits, said Hector Castaneda, CPA and principal at Castaneda CPA & Associates.
Several states tax benefits based on age, income and other factors, said Bethany Laurence, an attorney and senior legal editor at Nolo who edits several Nolo guides on Social Security.
In the following states, Social Security Disability Income (SSDI) is taxed according to federally adjusted gross income (AGI). “Most of these states don’t tax recipients whose income falls under certain thresholds, but in some states, like Colorado, this exemption is only for older people,” she said.
- Colorado: Ages 55 to 64 with an AGI under $75,000 ($95,000 for couples) are exempt. Higher earners can exclude $20,000. At 65+, all Social Security is exempt.
- Connecticut: Exempt if AGI is under $75,000 ($100,000 for couples). Above that, up to 25% of benefits are taxed.
- Minnesota: AGI under $78,000 ($100,000 for couples) exempts all benefits. Higher earners get partial relief.
- Montana: Uses federal-style method. Benefits are exempt if income is under $25,000 ($32,000 for couples). Above that, some benefits are taxed at state rates.
- New Mexico: Disability benefits are exempt if AGI is under $100,000 ($150,000 for couples).
- Rhode Island: At full retirement age, AGI under $126,250 ($101,000 for couples) exempts benefits; above that, some are taxed.
- Utah: AGI under $45,000 ($75,000 for couples) exempts benefits. Higher earners get partial relief.
- Vermont: Exempt if AGI is under $50,000 ($65,000 for couples). Slightly higher incomes may get partial relief.
- West Virginia: AGI under $50,000 ($100,000 for couples) exempts benefits. Above that, 65% is excluded in 2025, 100% in 2026.
Learn Your Taxable Thresholds
Laurence said it’s also important to find out the federal thresholds to prepare for how much you’ll be taxed.
- Single filers: Income between $25,000 and $34,000 means up to 50% of benefits are taxed. Over $34,000, up to 85% taxed.
- Joint filers: Combined income between $32,000 and $44,000 means up to 50% of benefits taxed. Over $44,000, up to 85% are taxed.
Understand Your Deductions
After calculating AGI, you can take the standard or itemized deduction. For 2025, those 65 and older can claim $17,750 if single or $34,700 if married.
A One Big Beautiful Bill bonus deduction also applies through 2028, even if you itemize. The bonus phases out as income rises. Singles qualify fully up to $75,000 and couples up to $150,000. It disappears at $175,000 for singles or $250,000 for couples.
Plan Your Withdrawals Carefully
Retirees often don’t realize that IRA withdrawals, pensions and even interest from municipal bonds can push benefits into the taxable range, Castaneda said.
“If you don’t plan ahead, like using Roth accounts, spacing out withdrawals or making charitable gifts directly from an IRA, you can end up paying more than you need to. Planning goes a long way,” he said.
Consider Relocating or Restructuring
If you live in a state that taxes benefits, “relocating to a state that doesn’t tax Social Security can eliminate the burden of being taxed,” Castaneda said. Retirees can also restructure withdrawals — for example, tapping Roth IRAs instead of traditional IRAs — since Roth withdrawals don’t increase taxable income.
While state taxes can shrink your Social Security check, careful planning can keep more money in your pocket. Know your thresholds, use smart withdrawal strategies and consider location in your retirement plans.
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