States That Do Not Tax Social Security Benefits
Social Security taxation at the state level has changed rapidly. Missouri, Nebraska, and Kansas eliminated state taxation of benefits effective 2024; West Virginia is phasing it out through 2026. As of the 2025 tax year, forty-one states plus the District of Columbia impose no state tax on Social Security benefits. The nine that still tax some portion of benefits use varied formulas, most with income-based exemptions.
The forty-one states that exempt Social Security
Alabama, Alaska, Arizona, Arkansas, California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming. (Nine of these have no state income tax at all; the other thirty-two have a specific exclusion for Social Security.)
The nine states that still tax Social Security
| State | 2025 treatment |
|---|---|
| Colorado | Full deduction of Social Security for taxpayers age 65+; ages 55–64 deduct up to $20,000 of all retirement income. |
| Connecticut | Full exemption for single AGI below $75,000 / MFJ below $100,000; phased above. |
| Minnesota | Exempt for MFJ AGI under $105,380; phaseout through $144,180 (2025 indexed); above, federally taxable portion is also state-taxable. |
| Montana | Taxes Social Security following federal taxable amount; partial deduction for some seniors. |
| New Mexico | Full exemption for AGI below $100,000 single / $150,000 MFJ; partial above. |
| Rhode Island | Full exemption for retirees at full retirement age with AGI below $104,200 single / $130,250 MFJ (2024 indexed). |
| Utah | Credit equal to Social Security tax otherwise due, phased out above $45,000 single / $75,000 MFJ. |
| Vermont | Full exemption for single AGI below $50,000 / MFJ below $65,000; phaseout to no exemption above $60,000 / $75,000. |
| West Virginia | Phasing out: 35% exempt for 2024, 65% for 2025, 100% for 2026 under H.B. 4880. |
Why state treatment matters more than the federal rule
Federally, between 0% and 85% of Social Security benefits are included in income under §86, determined by "combined income" thresholds frozen in statute since 1983. For a high-income retiree, 85% inclusion is automatic. A retiree drawing $60,000 in benefits and $150,000 from other sources has $51,000 of federally taxable Social Security and pays federal tax on it at the marginal rate.
State exemption applies on top: even though federal includes $51,000, a Florida resident pays $0 state tax on it; a Connecticut resident at the same income may pay full state tax on the same $51,000. The state delta on Social Security alone can exceed $3,500 per year.
Worked example: $60K Social Security, $80K IRA
MFJ couple, age 70. Social Security $60,000; traditional IRA withdrawals $80,000; total $140,000. Federal taxable Social Security: 85% × $60,000 = $51,000. Federal AGI: $131,000.
- Florida: $0 state tax on any of it.
- Connecticut: Federal income above the $100K MFJ exemption threshold; Social Security partial inclusion; estimated state tax approximately $4,200 (CT rates 3%–6.99%).
- Minnesota: AGI above the $144K phaseout completion; full federally taxable Social Security flows to state return; estimated state tax approximately $7,400.
- California: Social Security fully exempt at state level. State tax on the $80K IRA only, approximately $1,800.
Counterintuitive result: California — among the highest-tax states overall — treats Social Security better than several lower-rate states because of the categorical exemption.
Common mistakes
- Confusing federal and state inclusion. Federal taxes up to 85% of benefits at ordinary rates regardless of state.
- Assuming low-tax states are always best for Social Security. Pennsylvania exempts all retirement income, including Social Security, despite having a 3.07% flat tax. It often outperforms higher-rate states with worse Social Security treatment for the typical retiree.
- Ignoring the income phaseouts. Connecticut and Minnesota fully exempt Social Security at moderate incomes but tax at full marginal rates above the threshold. A small income increase can trigger a large tax increase at the cliff.
- Not updating state-tax assumptions year to year. Eight states have changed their Social Security treatment since 2022.
Sources
- Internal Revenue Code §86, taxation of Social Security benefits: law.cornell.edu/uscode/text/26/86
- Social Security Administration, "Income Taxes and Your Social Security Benefit": ssa.gov/benefits/retirement/planner/taxes.html
- Tax Foundation, "States That Tax Social Security Benefits": taxfoundation.org states that tax social security
- West Virginia H.B. 4880 (2024): wvlegislature.gov H.B. 4880
- Connecticut Department of Revenue Services, IP 2024(8), Social Security Benefits: portal.ct.gov DRS IP 2024(8)
State-level Social Security treatment can move retirement after-tax income by 5–10%. Explore the free educational tool.