41 States Exempt Social Security Benefits from State Taxes in 2025

Social Security benefits remain a crucial source of income for many retirees, with average monthly payments around $2,000, though benefits vary by lifetime earnings. While beneficiaries receive a uniform cost of living adjustment (COLA), the impact differs across states because only nine states will tax Social Security benefits in 2025, including Colorado, Connecticut, Minnesota, and Vermont, whereas 41 states plus Washington, D.C. do not impose such taxes. Federal taxation of Social Security benefits depends on combined income thresholds; individuals earning below $25,000 and joint filers below $32,000 generally pay no federal taxes on these benefits, but up to 85% of benefits can be taxable for higher incomes. Several states like Missouri, Nebraska, and Kansas have recently ceased taxing Social Security, and West Virginia is phasing out such taxes by 2026, reducing the tax burden on retirees in these areas. Despite the program's importance, Social Security's financial outlook is uncertain, with potential benefit reductions if reforms are not enacted. Overall, retirees in non-taxing states effectively receive a higher net benefit increase from COLA adjustments compared to those in taxing states, impacting retirement income security across the U.S.