Last Updated: December 15, 2025

One of the biggest mistakes some retirees and pre-retirees make is not understanding that your income from Social Security is taxed. At the federal level, you’ll pay taxes on your Social Security benefits. 

You pay federal taxes if your combined income (50% of your Social Security benefits plus earnings and other income) is above a certain threshold. For 2026, that threshold is $25,000 for single filers and $32,000 for joint filers.¹

You can choose to pay your taxes on Social Security benefits at tax time, or you can apply to have those taxes withheld from your benefits. Consider whether it makes more sense to pay your taxes as you go. For some retirees, that’s a more manageable way to handle the tax bill.

State income taxes on Social Security benefits

At the state level, though, you might not have to pay taxes. In fact, there are only eight states that tax Social Security income as of 2026²:

• Colorado: A generous income deduction of $20,000 is available to retirees age 55 to 64. For taxpayers age 65 and older, they can deduct up to $24,000. This makes Colorado a relatively good option for retirees.
• Connecticut: There is a 2% tax on up to $10,000 for single filers and up to $20,000 for joint filers. If you are a single filer and make over $500,000 or a joint filer making over $1M, your Social Security income will be taxed at 6.99% in this largely tax-unfriendly state.
• Minnesota: Not the best place for most retirees, Minnesota charges a tax of 5.35% on up to $31,690 for single filers and $46,330 for joint filers. You will be charged 9.85% if you make over $193,240 as a single filer or $321,450 as a joint filer.
• Montana: You can exclude up to $5,500 of your Social Security benefits from taxable income.
• New Mexico: New Mexico is more tax friendly and doesn’t tax Social Security benefits for single filers earning up to $100,000 and joint filers who earn up to $150,000 per year.
• Rhode Island: This small New England state isn’t known as a great option for retirees, since Social Security income is taxed. For all filers a 3.75% tax is applied on up to $79,900 and 5.99% on up to $181,650.
• Utah: Utah taxes Social Security benefits, but some filers may qualify for a Social Security benefits tax credit up to $450.
• Vermont: If you’re a retired taxpayer in the cold state of Vermont, single filers will be charged a 3.35% tax on up to $47,900 and $79,950 if you are filing jointly. If you make over $242,000 as a single filer or $294,600 as a joint filer, you will be taxed at 8.75%.

The remaining states do not tax Social Security benefits.

It’s important to pay attention to tax laws since they change often. Retirees might make the mistake of thinking that once they’ve got a tax strategy, they don’t need to worry about it. But you should pay attention to changes so you can adjust your plans accordingly.

Additionally, if you work during retirement and while taking Social Security, that income can impact your tax situation.

Please check out the following classes to learn more about Social Security Taxation:

Working Part-Time Impacts Your Benefits

How Social Security is Taxed

SOURCES

1. “Income Taxes and Your Social Security Benefit.” SSA, https://www-origin.ssa.gov/benefits/retirement/planner/taxes.html. Accessed 15 December 2025.
2. Washington, Katelyn, “Taxes in Retirement: How All 50 States Tax Retirees.” Kiplinger, 20 October  2025, https://www.kiplinger.com/retirement/602202/taxes-in-retirement-how-all-50-states-tax-retirees. Accessed 15 December 2025.