90% of Social Security Beneficiaries Receive Tax Break
Category: Social Security
- 04 Jul 2025
- Posted By WebSiteAdmin
New legislation was signed this week which removed federal taxes on Social Security benefits for up to 90% of recipients, providing much needed relief. When a person is on a fixed-income and unable to work, every penny counts.
“This is a historic step forward for America’s seniors,” said Social Security Commissioner Frank Bisignano. “For nearly 90 years, Social Security has been a cornerstone of economic security for older Americans. By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned.”
It is estimated that the average Social Security recipient will save between $90 and $550 annually now that federal taxes on Social Security benefits are eliminated. The exact amount depends on the individual’s income level, as those with higher incomes would see larger tax reductions.
State Income Tax
Most states do NOT tax Social Security benefits. There are only a few states that still impose a state income tax on Social Security:
Colorado
Connecticut
Minnesota
Montana
New Mexico
Rhode Island
Utah
Vermont
West Virginia
Important Note: Even within these states, the rules vary, and many retirees may not actually have to pay state income taxes on their Social Security benefits. Several of these states offer income-based exemptions, meaning if your adjusted gross income (AGI) falls below a certain threshold, your Social Security benefits will not be taxed. Some states have very generous guidelines for these exemptions.
Luckily, we live in Florida where there is no state income tax whatsoever. There has been some chatter in legal circles about some of those states mentioned above who may be considering removing any state tax on benefits. There has also been a desire by Governor Ron DeSantis about removing property tax, especially for retired people. These measures will certainly help retired persons and those on fixed incomes.
