A recent study found that 41 states across the US have decided not to tax Social Security benefits by 2025. This is great news for retirees. It is worth noting that both Missouri and Kansas have decided to get rid of these taxes starting in 2024. With this change, in 2025, only nine states will still tax benefits.
Are you interested in what these changes will mean? Do read our piece about the Cost-of-Living Adjustment (COLA) increase that was announced for 2025 in Social Security. Here are five important things that retirees should know about this change.
Social Security taxes reduced in most states by 2025
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Are you wondering if your state or the place you want to retire will tax your Social Security benefits? Learn more about this subject so that you can make smart choices about your future. You should know these three important facts about the future of Social Security if you get it. You can make the best decisions for your retirement if you stay informed.
These are the new states that will not impose taxes on your Social Security benefits as of 2025:
- Connecticut: Social Security benefits are not taxed for single filers with an Adjusted Gross Income (AGI) below $75,000 or couples filing jointly with an AGI under $100,000.
- Minnesota: Offers exemptions for married filers with an AGI below $105,380 and individuals with an AGI under $82,190.
- Montana: Benefits are fully exempt for single filers with an AGI under $25,000 and joint filers with an AGI below $32,000.
- New Mexico: Exempts benefits from taxes for individuals earning less than $100,000 annually and couples making under $150,000.
- Rhode Island: Benefits are not taxed for individuals with an AGI under $88,950 and couples with an AGI below $111,200.
- Utah: Exempts benefits for single filers earning less than $30,000 per year and couples with incomes below $50,000.
- Vermont: Benefits are tax-free for couples earning less than $65,000 annually and individuals with incomes under $50,000.
- West Virginia: Currently, exempts individuals with incomes below $50,000 and couples earning less than $100,000. The state is phasing out Social Security taxes entirely: a 35% reduction in 2024, 65% in 2025, and full elimination by 2026
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People who are retired may be worried about the future of their Social Security benefits as the political scene changes. Trump’s plan to get rid of Social Security taxes is an important one. This winter, retirees should think about these three smart moves.
Some states have good tax policies that let people who get Social Security avoid paying taxes. For instance, Connecticut has a policy on exemptions that is similar to Colorado’s. People who file their taxes as single or married but file separately and have an AGI of less than $75,000 will not have to pay taxes on their benefits. If a married couple files jointly and their AGI is less than $100,000, they get the same tax break.
In the same way, Minnesota gives exemptions to people with certain amounts of income. A married person with an AGI of less than $105,380 or a single person with an AGI of less than $82,190 will not have to pay taxes on their Social Security benefits.
People who file as a single person and make less than $25,000 a year or less than $32,000 a year can deduct all of their Social Security benefits from their taxes. This deduction can make things a lot easier financially for a lot of retirees.
Also See :- New Social Security Payment Schedule for 2025 Announced With Increments
