The year 2024 ends, giving way to a 2025 full of changes for U.S. retirees hoping to benefit from changes in Social Security. In this context, several states will change their laws to stop taxing benefits, with the goal of helping seniors with fewer resources. However, it is important to note that a large percentage of retirees depend on these benefits to cover their daily expenses and subsist, despite the fact that they must pay taxes, unlike other cases. In this article we will detail what you should know about the states that will maintain a tax burden on Social Security next year.
You’ll have to pay more for Social Security in 2025 if you live in these states
Despite numerous complaints and calls to eliminate the taxes, there are still 9 states that tax Social Security income. Although Missouri, Nebraska, and Kansas have started on a path toward reducing taxes in 2024, with the intention of eliminating them completely in 2025, other states seem to have no intention of giving up this revenue that affects retirees. These states are Colorado, Connecticut, Minnesota, Montana, New Mexico, New Mexico, Rhode Island, Utah, Vermont and West Virginia. The latter plans to eliminate the taxes in 2026, although there is still time for this measure to become effective.
If you do not reside in any of these 9 states, you will be able to receive your Social Security income in full in 2025, which will be a financial relief for both you and your family. Undoubtedly, the elimination of taxes on these benefits is the desired goal for many, as it allows for considerable savings for retirees. According to data, in some states retirees can save up to $1,500 annually thanks to the absence of taxes, using that money as they prefer, either to save or cover other needs.
Important details
However, according to several studies, the cost of living in states where Social Security benefits are not heavily taxed tends to be higher than in the rest. Therefore, the economic difference may not be as significant, although having that money in your hands allows you to manage it as you wish, whether for savings, shopping or travel.
As noted above, while the absence of Social Security taxes has advantages, it can also present some disadvantages depending on the particular situation in each state. For example, in Colorado, beginning in 2025, the tax on these benefits will be eliminated for people between the ages of 55 and 64 with incomes under $75,000, which is an additional benefit for this group.
