Colorado Among 9 States Getting a Cut from Your Social Security; See 2025 Tax Deductions Details

Race Day Live – Colorado is one of nine states that will reduce your Social Security benefits; see details on 2025 tax deductions.

Retirees with income above a certain threshold must pay federal income taxes on their Social Security benefits. However, not everyone’s tax obligations end there.

In rare situations, you may be required to pay state income taxes on your Social Security benefits. Knowing which states impose these taxes can help you plan your retirement.

These are the states where residents may face additional income taxes on Social Security earnings.

Colorado

Colorado taxes some Social Security income. Taxpayers aged 55 to 64 can deduct up to $20,000 in Social Security benefits from their state-taxable income.

After age 65, Colorado residents can deduct up to $24,000 of their Social Security benefits from their state taxable income.

Colorado’s individual income tax rate is unchanged at 4.4%.

Utah

Utah Governor Spencer Cox supports abolishing state Social Security taxes. For the time being, some residents must continue to pay the tax.

Some people, however, can receive a tax credit for Social Security taxes. The Utah state government has a worksheet on its website that will help you determine whether you are eligible for the break.

Utah has a flat state income tax rate of 4.55%.

Connecticut

Individual Connecticut taxpayers with an adjusted gross income of $75,000 or less can deduct all of their Social Security benefits from their state taxable earnings. The adjusted gross income for married couples filing jointly is $100,000.

Those with incomes over these thresholds continue to obtain a partial exemption from state taxes. State taxes on Social Security payouts do not exceed 50% of the benefit amount.

Connecticut income taxes range from 2% to 6.99%.

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Minnesota

Minnesota residents may deduct a portion of their Social Security benefits from their state-taxable income.

Single taxpayers making $82,190 or less are totally exempt from state Social Security taxes.

If your total income is $105,380 or less, your Social Security benefits are totally exempt from state taxes. Those who earn more than these limits will be required to pay some state taxes on their Social Security income.

Minnesota income taxes range from 5.35% to 9.85%.

Montana

In Montana, single filers with an income of less than $25,000 and couple filers with an income of less than $32,000 do not pay state taxes on their Social Security benefits. Others may owe such taxes, nevertheless.

Montana’s income taxes range from 4.7% to 5.9%.

New Mexico

In New Mexico, most seniors are exempt from paying Social Security taxes. Since 2022, single seniors with less than $100,000 in income and married couples filing jointly with less than $150,000 in income have not been required to pay state income taxes on their Social Security benefits.

Those who earn more than these restrictions are required to pay state taxes on their social security benefits.

New Mexico has income tax rates ranging from 1.7% to 5.9%.

Rhode Island

Rhode Island pensioners who have reached full retirement age will not be taxed on their Social Security payouts if their total income is $101,000 or less for singles or $126,250 for married couples filing jointly.

If your income exceeds this amount, you must pay taxes on your Social Security benefits.

Rhode Island’s income tax rates range between 3.75% and 5.99%.

Vermont

Vermont offers Social Security income exemptions to individuals with specific income thresholds.

Social Security benefits are exempt from state taxes for married couples and civil unions with an adjusted gross income of $65,000 or less. Single filers with an income of $50,000 or less are not eligible.

Others’ Social Security income will be subject to state charges.

Vermont’s income tax rates range from 3.35% and 8.75%.

West Virginia

West Virginia is now phasing out taxes on Social Security benefits, which is good news for residents looking to improve their financially.

Residents earning less than $50,000—or less than $100,000 for joint filers—are no longer required to pay these taxes. Social Security taxes will be cut for anyone earning more than these levels. By 2026, the tax will be completely gone.

West Virginia’s income tax rates range from 2.36% and 5.12%.

Conclusion

Social Security payouts are subject to both federal and state taxes, which can have a major impact on your retirement budget. For those seeking a more comfortable financial situation, consider ways to supplement your Social Security income, such as working part-time or beginning a side business.

Whatever your bank account balance is, there is always room to optimize and improve your finances. Here’s a quick list of topics to look into today.

Debt can impede you from improving your overall financial situation. Aside from spending less, there are tools available to help you pay off debt faster, such as balance transfer credit cards and debt counseling.

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