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Retirees whose income exceeds a certain threshold face federal income taxes on their Social Security benefits. But the tax obligations don't stop there for everyone.
In some places, you might also owe state income taxes on your Social Security benefits. Knowing which states levy these taxes can help you plan for retirement.
Here are the states where residents may face extra income taxes on Social Security income.
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Colorado
Colorado does tax a portion of Social Security benefits, though partial exemptions are available. Residents ages 55 to 64 may exclude up to $20,000 of Social Security income from their state taxable income. Once taxpayers reach age 65, they can deduct up to $24,000 of qualifying pension and annuity income. Colorado applies a flat individual income tax rate of 4.4%.
Connecticut
Individual Connecticut taxpayers with an adjusted gross income of $75,000 or less can deduct 100% of their Social Security income from their state taxable income. For a married couple filing jointly, the adjusted gross income threshold is $100,000.
Those with an income above those thresholds still get a partial exemption from state taxes. State taxation of Social Security benefits does not exceed 25% of benefits received.
Connecticut income taxes range from 2% to 6.99%.
Minnesota
Minnesota residents can deduct at least a portion of Social Security payments from their state taxable income.
For single taxpayers, those earning $84,490 or less are fully exempt from state Social Security taxes. For married couples filing jointly, Social Security benefits are fully state-tax exempt if your income is $108,320 or less.
Those who earn more than those amounts could pay at least some state taxes on Social Security income.
Minnesota income taxes range from 5.35% to 9.85%.
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Montana
Montana imposes a 5.65% income tax on earnings above $95,000 for joint filers and $47,500 for single filers.
Taxpayers age 65 and older are limited to a $5,500 subtraction from their federal taxable income, and several deductions that once benefited older residents, including a partial interest income deduction, have been eliminated in recent years.
New Mexico
In New Mexico, most retirees are exempt from Social Security taxes. Since 2022, single seniors with less than $100,000 in income and married couples filing jointly with less than $150,000 in income haven't seen their Social Security benefits subjected to state income tax.
Those with income above these thresholds must pay state taxes on their Social Security benefits, however.
New Mexico's income taxes range from 1.7% to 5.9%.
Rhode Island
Among married couples filing jointly, state taxes on Social Security benefits apply only when adjusted gross income reaches $133,750 or higher. For most other filing statuses, retirees generally owe state tax on their Social Security income only if their federal AGI is $107,000 or above.
Rhode Island's income taxes range from 3.75% to 5.99%.
Utah
Utah provides a $450 retirement tax credit, though it isn't available to taxpayers who also claim the Social Security benefits credit or the Military Retirement credit. The state applies a flat income tax rate of 4.5% to all taxable income.
Vermont
Vermont does not tax Social Security benefits for all retirees. Instead, the state offers a full exemption for Social Security income to retirees who fall below certain income limits.
For the 2026 tax year, married couples filing jointly owe no state tax on their benefits if their AGI is $70,000 or less, while single filers and those married filing separately qualify for a full exemption with an AGI of $55,000 or below. A partial exemption is available for single filers with AGI up to $64,999 and for joint filers with AGI up to $79,999.
Bottom line
Federal and state taxes on Social Security benefits can have a big impact on your budget during retirement.
For those seeking a more comfortable financial situation, consider ways to supplement your Social Security income, such as taking on a part-time job or developing a side hustle.
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