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9 States Still Taxing Social Security in 2025—Where Does Yours Rank?

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For retirees, Social Security benefits are a lifeline, but in some parts of the country, they’re still subject to state taxation. While most states have eliminated these taxes to protect seniors, there remain a handful holding onto the policy. Knowing which places are included in the nine states still taxing Social Security in 2025 is critical for anyone planning where to live in retirement. These taxes can significantly impact your budget, especially if you rely heavily on fixed income. Understanding how each state handles Social Security helps you prepare financially and decide if relocation makes sense.

1. Colorado

Colorado continues to tax Social Security benefits, though it does offer deductions for certain income levels. The state allows exemptions for retirees over a certain age, but many still find themselves owing taxes. This makes it one of the nine states still taxing Social Security in 2025 despite efforts to soften the blow. Retirees need to carefully calculate their income to understand how much is taxable. For those with higher pensions or savings, Colorado’s tax laws may have a bigger impact.

2. Connecticut

Connecticut has been reducing its taxation of Social Security, but not everyone qualifies for the full exemption. Lower and middle-income retirees may see relief, while higher-income households still pay. As part of the nine states still taxing Social Security in 2025, Connecticut highlights how rules can vary depending on earnings. Seniors planning to stay here should monitor income thresholds closely. A small bump in income could mean paying taxes unexpectedly.

3. Minnesota

Minnesota is known for having some of the highest taxes in the country, and Social Security is no exception. Although the state provides some credits and deductions, many seniors still end up paying. Being one of the states still taxing Social Security in 2025 makes Minnesota less attractive for retirees seeking to stretch their income. While benefits like healthcare access may offset the cost, taxation remains a burden. Seniors here should factor taxes into their overall retirement budget.

4. Montana

Montana applies state income taxes to Social Security benefits for residents above certain income levels. Similar to federal rules, the state taxes a portion of benefits based on combined income. That places it among the states still taxing Social Security in 2025. Retirees considering Montana for its natural beauty should weigh these costs carefully. While property taxes are relatively low, Social Security taxation can reduce the savings.

5. New Mexico

New Mexico has been working to phase out Social Security taxation, but as of 2025, it hasn’t fully disappeared. Certain income thresholds still trigger taxes for retirees. That’s why it remains one of the nine states still taxing Social Security in 2025. Retirees in New Mexico should review whether they qualify for available exemptions. While progress is being made, the policy hasn’t completely gone away.

6. Rhode Island

Rhode Island exempts many lower-income retirees from Social Security taxes, but not all. Higher-income households still face taxation. As a result, it’s included in the nine states still taxing Social Security in 2025. Seniors need to watch their taxable income carefully to avoid surprises. With New England’s already high living costs, these taxes can add to the financial strain.

7. Utah

Utah taxes Social Security benefits but provides credits to reduce the impact for some households. The credits are based on income levels, meaning retirees with higher incomes may not benefit. This keeps Utah on the list of states still taxing Social Security in 2025. For retirees balancing savings and pensions, it’s important to calculate how much relief they actually qualify for. Without planning, the tax hit may be more than expected.

8. Vermont

Vermont applies state income taxes to Social Security for residents above a certain income level. The thresholds determine how much of the benefit is taxable, leaving some retirees unaffected while others pay significantly. Its presence among the states still taxing Social Security in 2025 shows the inconsistency across states. Vermont retirees need to keep close tabs on their income to predict tax obligations. The system rewards lower earners but penalizes those with added retirement savings.

9. West Virginia

West Virginia has gradually reduced its taxation on Social Security but not eliminated it. For 2025, retirees above specific income levels still pay taxes. That places it firmly among the nine states still taxing Social Security in 2025. The good news is the state continues to explore reforms, but for now, retirees must budget accordingly. Careful planning ensures Social Security income goes further even with taxes applied.

Choosing Where to Retire with Taxes in Mind

Deciding where to retire isn’t just about climate and lifestyle—it’s also about how much of your income you get to keep. The reality is that nine states still taxing Social Security in 2025 create challenges for retirees who depend on every dollar. While exemptions and credits soften the impact, taxes still add up over time. By staying informed and comparing options, retirees can make smarter choices about where to live. Ultimately, understanding the rules before retirement begins helps avoid financial surprises later.

Do you live in one of the states still taxing Social Security? Share how it impacts your retirement planning in the comments below!

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Catherine Reed

Catherine is a tech-savvy writer who has focused on the personal finance space for more than eight years. She has a Bachelor’s in Information Technology and enjoys showcasing how tech can simplify everyday personal finance tasks like budgeting, spending tracking, and planning for the future. Additionally, she’s explored the ins and outs of the world of side hustles and loves to share what she’s learned along the way. When she’s not working, you can find her relaxing at home in the Pacific Northwest with her two cats or enjoying a cup of coffee at her neighborhood cafe.

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If you’re thinking about moving or just curious about how your state stacks up, you might want to pay close attention to where you live. Not all states are created equal when it comes to jobs, happiness, and safety. In fact, some states consistently fall short, leaving their residents struggling with high unemployment, low life satisfaction, and even personal safety concerns. Understanding which states are lagging behind can help you make smarter decisions for your family, your career, and your overall well-being. Let’s dive into the 12 states that are failing their residents—and what you can do if you find yourself living in one of them.

1. Mississippi

Mississippi often ranks at the bottom for jobs, happiness, and safety. The state has one of the highest poverty rates in the country, and job opportunities are limited, especially in rural areas. U.S. News & World Report, Mississippi also struggles with low life expectancy and high crime rates. If you’re a resident, consider seeking remote work opportunities or upskilling to improve your job prospects.

2. Louisiana

Louisiana faces persistent challenges with unemployment and crime. The state’s violent crime rate is among the highest in the nation, and job growth has lagged behind the national average. Residents often report lower levels of happiness, partly due to economic instability and natural disasters. Building a strong community network and staying informed about local job openings can help if you live here.

3. West Virginia

West Virginia’s economy has been hit hard by the decline of coal mining, leading to high unemployment and limited job diversity. The state also ranks low in health and happiness, with many residents struggling with opioid addiction and poor access to healthcare. Exploring online education or training programs can open doors to new career paths.

4. New Mexico

New Mexico’s beautiful landscapes can’t hide its struggles with crime and joblessness. The state has one of the highest property crime rates in the U.S., and many residents face underemployment. If you’re in New Mexico, consider networking with local business groups or looking into industries like tourism and renewable energy, which are showing growth.

5. Alabama

Alabama’s job market is slow to recover from economic downturns, and the state has a higher-than-average rate of workplace fatalities. Residents also report lower happiness levels, often tied to limited access to healthcare and education. Taking advantage of state-sponsored job training programs can help you get ahead.

6. Arkansas

Arkansas struggles with both economic opportunity and public safety. The state’s median household income is well below the national average, and violent crime rates are concerning. If you’re an Arkansas resident, focusing on financial literacy and budgeting can help you make the most of your resources while you seek better opportunities.

7. Oklahoma

Oklahoma’s economy is heavily dependent on oil and gas, making it vulnerable to market fluctuations. The state also ranks low in health and happiness, with high rates of obesity and mental health issues. Residents can benefit from diversifying their skill sets and exploring careers in growing sectors like tech or healthcare.

8. Kentucky

Kentucky faces challenges with job growth, health, and safety. The state’s opioid crisis has impacted both happiness and public safety, while job opportunities remain limited in many rural areas. If you’re in Kentucky, consider reaching out to local workforce development agencies for support and training.

9. Alaska

Alaska’s remote location contributes to high living costs and limited job options. The state also has a high rate of violent crime, particularly in rural communities. Residents can look into remote work or seasonal employment opportunities to supplement their income.

10. South Carolina

South Carolina’s job market is growing, but not fast enough to keep up with population growth. The state also struggles with high rates of property crime and lower-than-average happiness scores. If you’re a resident, staying proactive about personal safety and seeking out local job fairs can make a difference.

11. Tennessee

Tennessee’s booming cities can’t mask the struggles in rural areas, where jobs are scarce and crime rates are higher. The state also ranks low in overall happiness, with many residents citing financial stress. Exploring side hustles or gig work can help bridge the gap while you search for more stable employment.

12. Missouri

Missouri rounds out the list with its combination of slow job growth, high crime rates, and low happiness scores. The state’s urban centers, in particular, face significant safety challenges. Residents can benefit from community engagement and staying informed about local job training initiatives.

Turning Challenges Into Opportunities

Living in a state that’s struggling with jobs, happiness, and safety doesn’t mean you’re stuck. There are always ways to improve your situation, whether it’s by seeking new skills, building a supportive network, or exploring remote work options. Remember, your state’s statistics don’t define your future—you do. You can find opportunities even in the most challenging environments by staying proactive and informed.

What’s your experience living in one of these states? Do you agree with the rankings, or have you found ways to thrive despite the challenges? Share your thoughts in the comments below!

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Travis Campbell

Travis Campbell is a digital marketer/developer with over 10 years of experience and a writer for over 6 years. He holds a degree in E-commerce and likes to share life advice he’s learned over the years. Travis loves spending time on the golf course or at the gym when he’s not working.