States That Won’t Tax Social Security Benefits

Social Security is a financial lifeline for many retirees across the United States. For nearly 40% of Americans aged 65 and older, it accounts for at least half of their income, according to AARP. However, where you reside can significantly affect how much of your Social Security check you actually get to keep.

While federal taxes may claim up to 85% of your Social Security benefits depending on your income, some states also levy taxes on these benefits. Fortunately, the number of states doing so is shrinking, with only nine states taxing Social Security in 2025.

Let’s explore the evolving tax landscape and why retirees in 41 states can breathe a little easier.

List of States Taxing Social Security


By 2025, only nine states will still tax Social Security benefits:
  1. Colorado
  2. Connecticut
  3. Minnesota
  4. Montana
  5. New Mexico
  6. Rhode Island
  7. Utah
  8. Vermont
  9. West Virginia

Changes in State Laws


Several states recently joined the growing list of those exempting Social Security from taxation:
  • Missouri and Nebraska will fully eliminate Social Security taxes starting in 2024.
  • Kansas passed legislation in 2024 to end Social Security taxation going forward.
  • West Virginia plans to phase out Social Security taxes completely by 2026.
These changes reflect a broader trend of states easing financial burdens on retirees.

States That Won’t Tax Social Security in 2025


Here’s the full list of 42 states Washington, D.C., where your Social Security benefits will be free from state taxation:
  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Delaware
  7. Florida
  8. Georgia
  9. Hawaii
  10. Idaho
  11. Illinois
  12. Indiana
  13. Iowa
  14. Kansas
  15. Kentucky
  16. Louisiana
  17. Maine
  18. Maryland
  19. Massachusetts
  20. Michigan
  21. Mississippi
  22. Missouri
  23. Nebraska
  24. Nevada
  25. New Hampshire
  26. New Jersey
  27. New York
  28. North Carolina
  29. North Dakota
  30. Ohio
  31. Oklahoma
  32. Oregon
  33. Pennsylvania
  34. South Carolina
  35. South Dakota
  36. Tennessee
  37. Texas
  38. Virginia
  39. Washington
  40. Wisconsin
  41. Wyoming
  42. Washington, D.C.

How Much Do Retirees Save?


Living in a state that doesn’t tax Social Security benefits can lead to substantial savings. To estimate your savings, consider the effective tax rate in your state and apply it to your Social Security benefits.

For example:
  • If your effective tax rate is 5% and you receive $30,000 annually in Social Security, you could save $1,500 a year.
This benefit varies depending on your state’s tax rules. Some states, like Colorado, offer deductions or exemptions based on age and income. For instance, in Colorado:
  • Residents aged 55-64 with adjusted gross incomes of $75,000 (single) or $95,000 (joint) will qualify for a full exemption starting in 2025.

Big Picture Impact


The collective savings for retirees in states eliminating Social Security taxes are significant:
  • Missouri retirees will collectively save an estimated $309 million annually.
  • In Nebraska, the annual savings amount to around $17 million.
These changes leave more money in retirees’ pockets, enhancing their financial security and spending power during their golden years.

Why This Matters


For retirees, every dollar matters. The state you choose to live in can have a profound impact on your retirement finances. As more states eliminate Social Security taxes, retirees have increased options to maximize their benefits and enjoy a more financially secure retirement.

When planning your retirement, take the time to explore the tax policies of your chosen state. Even small differences in state tax laws can lead to big savings over time, helping you keep more of the money you’ve earned.