As retirement planning becomes an increasing concern for millions of Americans, one of the key considerations is how Social Security benefits are taxed. While the federal government may tax a portion of these benefits depending on a retiree’s income level, state taxation policies vary widely.

The good news is that in 2025, 41 U.S. states and the District of Columbia will not impose state income taxes on Social Security benefits. This means retirees living in these states can receive their Social Security payments without deductions at the state level.

States That Will Not Tax Social Security Benefits in 2025

The following 41 states, along with Washington, D.C., will fully exempt Social Security benefits from state taxation:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Delaware
• 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

Additionally, Washington, D.C., does not tax Social Security benefits.

States That Will Continue to Tax Social Security Benefits in 2025

As of 2025, nine states still impose state taxes on Social Security benefits, though some have income thresholds or exemptions to reduce the burden on lower-income retirees. These states are:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia (expected to phase out taxation by 2026)

Recent Changes in State Tax Policies

Several states have recently revised their tax policies to eliminate taxation on Social Security benefits:

• Missouri: Effective January 1, 2024, Missouri no longer taxes Social Security income. (Missouri Department of Revenue)
• Nebraska: Nebraska has phased out taxation of Social Security benefits, with full exemption starting in 2025. (Nebraska Department of Revenue)
• Kansas: Kansas passed legislation in 2024 to eliminate Social Security benefit taxation for retirees. (Kansas Department of Revenue)
• West Virginia: Currently taxing benefits but phasing out the tax completely by 2026. (West Virginia State Tax Department)

Federal Taxation of Social Security Benefits

While these 41 states will not tax Social Security benefits, retirees must still consider federal taxation. The IRS taxes benefits based on a formula that includes:

• Adjusted Gross Income (AGI)
• Nontaxable interest income
• 50% of Social Security benefits

Depending on total income, up to 85% of Social Security benefits may be taxable at the federal level. More details are available on the IRS website.

What This Means for Retirees

Retirees living in one of the 41 tax-free states can maximize their Social Security income without state tax deductions. However, other factors should be considered, such as:

• State Sales & Property Taxes – Some states with no Social Security taxes may have higher property or sales taxes. (Tax Foundation)
• Cost of Living – States like Florida and Texas may have no income tax, but housing and healthcare costs can be high.
• Healthcare & Retirement-Friendly Policies – States with good healthcare infrastructure, senior benefits, and lower costs of living may be preferable.

Conclusion

For retirees planning their golden years, choosing a tax-friendly state can help preserve more of their Social Security income. The elimination of state taxes on Social Security benefits in 41 states provides a financial boost for retirees seeking to maximize their monthly benefits.

However, taxation is just one piece of the puzzle. Cost of living, healthcare access, and overall tax burdens should also play a role in deciding the best place to retire.