Despite a growing trend of states reducing or eliminating taxes on Social Security benefits, there are still several states where you can expect to pay taxes on your Social Security in 2025. While this might seem like an outdated policy, it’s worth examining whether these states are preparing for a shift—or if retirees will continue to face tax burdens in their golden years.
Colorado
In Colorado, Social Security benefits will still be taxed in 2025. However, there is a catch: if you’re between 55 and 64 years old and your adjusted gross income (AGI) is below $75,000 (individuals) or $95,000 (couples), you can fully deduct these federally taxed benefits.
A Classic “Middle Class Squeeze”?
On the surface, this may seem like a good deal, but how many retirees actually fall under this income bracket? The thresholds are relatively low, and for many retirees with additional sources of income, the benefit becomes irrelevant as tax brackets rise and cost-of-living increases.
Connecticut
In Connecticut, Social Security benefits are taxable if your AGI exceeds $75,000 for singles or $100,000 for married couples filing jointly. For those who fall above these thresholds, expect to pay your fair share of state taxes on your benefits.
A Tax on Middle-Class Retirees?
While these income limits might seem high to some, for retirees living on a fixed income, this could mean substantial tax liability. With Connecticut’s cost of living, is this tax exemption really a victory for retirees?
Minnesota
Minnesota continues to tax Social Security benefits in 2025, but it provides a threshold where benefits are exempt from taxation. If your AGI is under $82,190 (individuals) or $105,380 (couples), Social Security benefits are not taxed.
Is This Relief or Just a Mirage?
For many retirees, these income limits may still be too high to qualify for full exemption, pushing middle-class families right into the taxable territory. As the retirement age population grows, are these tax exemptions truly addressing the needs of the people?
Montana
Montana has a similar policy to Minnesota, offering exemptions based on income levels. However, benefits are taxed for those with an AGI above $25,000 (single) or $32,000 (married couples). For retirees with higher earnings, Social Security benefits will still be taxed.
A Low Income? Good News. Middle Class? Not So Much.
If you earn less than these thresholds, Montana will not tax your Social Security benefits. But for those living comfortably above the line, you’ll face the same old tax structure. Should retirees be expected to face higher taxes just for doing a little better financially?
New Mexico
New Mexico has stopped taxing Social Security benefits for individuals earning under $100,000 and couples earning below $150,000. Above these thresholds, however, expect state taxes on your Social Security.
The Rising Middle Class Burden
At first glance, this appears to be a solid deal for retirees. But those with income above $100,000—despite being part of the “middle class”—may find themselves stuck with taxes they hadn’t planned on. Will this policy be enough to offset the tax burden on higher-income retirees?
Rhode Island
Rhode Island exempts Social Security benefits from state taxes for individuals making less than $88,950 and married couples with an AGI under $111,200. For those above these limits, Social Security benefits will be taxable.
Does This Policy Favor the Wealthy?
While Rhode Island’s tax exemption seems generous, it’s worth questioning whether it’s really helping those who need it most. For retirees in the upper middle class, the tax exemptions may be beneficial—but for others, state taxes on benefits will still apply. Is this really helping the average retiree?
Utah
In Utah, Social Security benefits are taxed for single individuals making more than $30,000 annually or married couples with an income over $50,000.
Is This Policy Inclusive Enough?
While the exemption is available for lower-income retirees, the state tax burden continues for those in the middle-income bracket. For many retirees who rely on Social Security as a primary income source, these tax laws could place them in a precarious position as they try to make ends meet.
Vermont
In Vermont, Social Security benefits are taxable for individuals with an AGI above $50,000 and couples earning over $65,000.
A Bite Into the Middle Class
Vermont’s policy ensures that those with a higher income face taxes on their benefits, even though they might still be within the “middle class” bracket. How does this affect those who were counting on Social Security to supplement their retirement income?
West Virginia
West Virginia will phase out the taxation of Social Security benefits by 2026. For now, in 2025, Social Security benefits will still be taxed for individuals making more than $50,000 and couples with an income above $100,000.
A Slow Transition or a Real Tax Break?
While West Virginia’s gradual phase-out may seem like good news, retirees will still face tax burdens through 2025. Does this gradual elimination represent a tax break, or just a long waiting game for those impacted by taxes in the interim?
The Bigger Question
As more states phase out or reduce taxes on Social Security benefits, it’s easy to fall into the trap of thinking that tax relief is on the horizon. However, for the many retirees who are still facing tax burdens, the current landscape reveals something more unsettling: the middle class is still being taxed on their benefits. While a few states are offering tax relief, many others are simply shifting the burden, leaving retirees to deal with the consequences of hidden state taxes and rising costs elsewhere.
The truth is, the battle for meaningful retirement tax relief may still be far from won.
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