Americans are set for another financial blow as nine states within the USA prepare to tax their Social Security benefits from 2025, but who are they and how could it impact you and your bank account?
Workers spend their lives paying into the program through payroll taxes before being allowed to claim them from the age of retirement, with the aim of creating a continuous support cycle to support ageing citizens.
It could be a big blow to retirees, disabled workers, and surviving family members of deceased workers depending on the extra income from the federal government to continue to remain afloat in tough economic times.
Missouri and Kansas agreed to stop taxing Social Security benefits in 2024, meaning that now 41 states will not tax the support system, but the same cannot be said for the likes of Colorado, Connecticut and New Mexico.
So who is taxing Social Security and what are the conditions?
Colorado
Colorado, a state that’s home to almost six million people will tax Social Security benefits through 2025.
However, those aged between 55-64 and who have an adjusted gross income of $75,000 or less (individuals), or, $95,000 or less (couples filing jointly), can deduct the federal taxes from their next report.
Connecticut
The Democrat state of Connecticut will also tax Social Security benefits through 2025 on a similar basis to Colorado.
The only difference is that the adjusted gross income for couples filing jointly rises to no more than $100,000 before they become exempt from taxes.
Minnesota
Minnesota offers an adjusted gross income $105,380 for married couples before they become exempt from Social Security benefits taxes.
Individuals with an adjusted gross income no greater than $82,190 will also pay no taxes on their benefits.
Montana
Montana will tax all Social Security benefits greater than $25,000 adjusted gross income for individual filers and greater than $32,000 adjusted gross income for married couples filing jointly.
Montana is home to around 1.1 million people as of 2024 and voted for Donald Trump and the Republicans in the election.
New Mexico
New Mexico offers a very relaxed policy to taxing Social Security benefits, with those earning less than $100,000 adjusted gross income as individuals being exempt from taxes.
Those with an adjusted gross income of $150,000, who are married couples filing together, will also be exempt.
Rhode Island
Rhode Island will allow those earning below $88,950 in adjusted gross income to avoid Social Security benefits taxes.
Married couples with an adjusted gross income of no more than $111,200 will also be permitted to skip Social Security taxes.
Utah
Single-filers in Utah must earn no more than $30,000 per year to avoid Social Security benefits taxes.
Married couples must be making $50,000 or less to also avoid any taxes in the state home to 3.27 million people.
Vermont
The last Democrat state in the list, Vermont will allow individuals with an adjusted gross income of no greater than $50,000 to avoid taxes.
Those earning adjusted gross incomes of $65,000 or less, who are married and filing together, can also avoid Social Security taxes.
West Virginia
West Virginia plans to get rid of Social Security taxes in the future, but that time has not yet arrived as the state will still taxes those earning $50,000 or below as individuals.
Those who are married and filing together are capped at $100,000 before they will begin being taxed too. Taxes in 2025 will be reduced by 65% from 2023’s number.