There are 9 states in America taxing Social Security benefits in 2025

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Social Security benefits are an important source of retirement income, and no one wants to lose this money to taxes.

Unfortunately, some retirees do find themselves owing some of their retirement money to the IRS and to their state or local government.

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On the federal level, you'll be taxed on up to 50% of benefits once provisional income exceeds $25,000 for single tax filers and $32,000 for married joint filers — and on up to 85% of benefits if provisional income exceeds $34,000 or $44,000, depending on filing status. Provisional income is half your benefits plus your adjusted gross income (AGI) plus nontaxable interest.

On the state level, though, the rules are different. A total of 41 states don't tax benefits, but nine do. If you live in one of them, you may need to make some plans to avoid owing money to the government.

Does your state tax Social Security benefits?

Here are the nine states that will tax Social Security benefits in 2025:

Colorado Connecticut Minnesota Montana New Mexico Rhode Island Utah Vermont West Virginia

If your state is on the list, it's not necessarily a given that you'll need to pay tax on benefits. It depends on your income, as most states don't charge you unless you earn above a specific threshold. For example, in Connecticut, you're exempt unless your AGI is more than $75,000 for single filers or $100,000 for married joint filers.

You can confirm the thresholds with your state's department of revenue. If you are going to owe money, there are also a few things you can do to minimize the taxes you owe — or even avoid paying altogether.

Consider a Roth IRA conversion

Withdrawals from traditional retirement accounts, like a 401(k) and an individual retirement account (IRA), are counted in determining whether you'll be taxed on benefits. Roth IRA distributions, however, are not taxable and aren't counted toward that threshold.

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Read more: Rich, young Americans are ditching stocks — here are the alternative assets they're banking on instead

Be strategic in your timing

If you can keep your income below the limit when benefits become taxable, you won't owe money. There are a couple of different ways you can do that, including delaying your claim for Social Security benefits and drawing more from your savings early on.

If you draw down your investment accounts earlier on, you won't have to take out as much money when you must start taking required minimum distributions (RMDs) at age 73. This makes it easier to stay within the exemption limits.

You'll also increase your Social Security checks for each month you delay claiming benefits until age 70 — so you'll get a larger amount of retirement income from that source when you finally do claim benefits. Those larger Social Security checks in the future can help ensure you still have the money you need when taking smaller investment withdrawals at that time.

Just be sure you don't take so much out of your accounts early on in your retirement that you risk running out of money. To get the balance right, consider working with a financial adviser who can help you strategize a safe withdrawal rate and an optimum strategy for minimizing taxes.

Whether you want advice on planning for retirement or navigating complex tax strategies, you can find vetted financial professionals who can provide personalized financial guidance.

A trusted, pre-screened financial advisor can help you understand your exposure, protect your assets, and plan a path forward.

Finding the right advisor for your needs is simple with Advisor.com. Their platform connects you with experienced, qualified financial professionals in your area who offer personalized guidance and support in managing market fluctuations and optimizing your portfolio mix.

Maximize your charitable contributions

Finally, you also have the option of making charitable contributions to reduce your income and avoid taxes on Social Security benefits by staying under your state’s exemption threshold.

You may even be able to donate your RMD directly, although you must meet certain requirements to be eligible under the qualified charitable distribution rule. These requirements include being 70-and-a-half or older, keeping donations under $108,000 (increased from $105,000 for the 2024 tax year) and having the IRA distribution paid directly to the charity.

By exploring these options, you may be able to help keep taxes on Social Security to a minimum or even avoid paying them altogether. Of course, you also have the option of moving to one of the 41 states that don't tax those benefits, but relocating just to save on your tax bill may not be the best way to decide where to spend your retirement years.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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