Many Americans depend on Social Security as a key source of income in their retirement years. For some, it’s their only steady financial support.
But what many people don’t realize is that where you live can affect how much of your Social Security benefits you get to keep.
While the Social Security Administration (SSA) does not tax benefits directly at the federal level beyond certain thresholds, several states in the U.S. have their own rules. In 2025, some of these state rules might end up eating into your monthly Social Security payments.
Let’s break it down in simple terms so you can understand how your location might reduce your Social Security income and what you can do to plan.
Why Do Some States Tax Social Security Benefits?
Social Security benefits were originally designed to be tax-free. However, changes in tax laws over the years have allowed both federal and some state governments to impose taxes on these benefits, depending on your overall income.
At the federal level, if your combined income crosses a specific threshold, you might have to pay taxes on up to 85% of your benefits. But when it comes to states, it’s a different story.
Some states follow the federal tax rules, while others have their ways of deciding how much of your Social Security will be taxed. In 2025, 10 states still tax Social Security income, which means your monthly check could shrink depending on where you live.
These Are the States That Tax Social Security in 2025
Here’s a list of the 10 states where you might see a deduction in your Social Security benefits due to state taxes:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- Rhode Island
- Utah
Important Note: Each of these states has different income thresholds and tax percentages. So, the actual impact on your benefits can vary widely based on your overall income, marital status, and other factors.
How Much Could You Lose?
It’s hard to give an exact figure since the tax rate and rules change from state to state. But for someone receiving the average Social Security benefit of around $1,900 per month in 2025, if you live in one of these states and your income is above certain limits, you could see anywhere between $50 to $150 (or more) deducted each month for state taxes.
In some extreme cases, the loss could be higher if you have additional income sources like pensions, rental income, or investment returns.
What’s Changing in 2025?
While most states have maintained their existing tax rules, a few states are under pressure to change their policies as retirees are moving to tax-friendly states.
For example:
- Nebraska has announced plans to completely phase out Social Security taxes by 2026.
- Missouri is increasing the income limits where Social Security starts getting taxed, which might give some relief to lower-income retirees.
- Colorado is offering additional deductions to seniors over 65, softening the tax bite slightly.
But for now, in 2025, if you live in these 10 states, your benefits could still be reduced by state taxes.
Should You Consider Moving?
Many retirees are now carefully choosing states like Florida, Texas, and Tennessee, which have zero taxes on Social Security and no state income tax at all.
Moving might help protect your Social Security income, but before packing your bags, think about the other costs of living in that state. For example, housing, healthcare, transportation, and even weather conditions should be part of your decision.
Tips to Protect Your Social Security Income
- Know your state’s rules – Check your local tax laws every year. States can change their tax codes at any time.
- Plan your income smartly – Keep your combined income below certain thresholds if possible, so less of your Social Security is taxed.
- Use tax planning tools – Consult a tax advisor who can help you use strategies like Roth IRAs or tax-free municipal bonds to keep your taxable income lower.
- Stay updated – Keep an eye on state legislative changes, especially if you live in one of the 10 states that still tax Social Security.
Why It Matters for Younger Workers Too?
Many people in their 40s and 50s ignore these issues, thinking it’s only a concern for retirees. But knowing which states are tax-friendly can help you plan your retirement better from now.
Where you decide to settle in your golden years can affect not just your Social Security but also your overall financial security.
Final Thoughts
The key message is clear – your Social Security benefits are not automatically safe from taxes once you start receiving them. In some states, the bite can be significant, and if you don’t plan, it might eat into your fixed income.
Being informed is the first step. Whether you are already retired or planning for retirement, keeping an eye on these state-specific tax rules can help you stretch your Social Security check as far as possible.