Unlock Your Windfall: Discover New Social Security Benefits Today!
Exciting changes are on the horizon for Social Security beneficiaries in 2025, and you’ll want to stay in the loop to maximize your financial well-being! Important shifts in how benefits are taxed (or exempted) across various states could impact your bottom line. Lucky for some, a number of states won’t tax Social Security benefits at all!
Are You in a State that Will Tax Your Social Security Benefits in 2025?
Here’s the silver lining: Kansas and Missouri have officially decided to stop taxing Social Security benefits starting in 2024, meaning beneficiaries there can breathe a little easier come tax season in 2025. Currently, a total of 41 states offer tax relief to their residents, while nine states continue to take a slice out of Social Security benefits. Here’s a rundown of those nine:
- Colorado: Nearly six million residents call Colorado home, and those who receive Social Security benefits will still face taxation in 2025. However, good news for those aged 55 to 64: If you earn $75,000 or less, you can deduct federal taxes from your return—$95,000 if you’re filing jointly!
- Connecticut: In this Democratic stronghold, Social Security benefits are also taxable. But it mirrors Colorado’s system, with a higher threshold of $100,000 for couples to worry about taxes on their benefits.
- Minnesota: Couples in Minnesota can earn up to $105,380 without facing taxes on their benefits. Individuals are exempt if they keep their adjusted gross income at or below $82,190.
- Montana: With a lower threshold, Montana taxes more beneficiaries. Here, the income limits are $25,000 for individuals and $32,000 for couples.
- New Mexico: A bit more lenient, New Mexico exempts individuals making up to $100,000 and couples earning $150,000 from taxes on Social Security benefits.
- Rhode Island: In the Ocean State, the limits are $88,950 for individuals and $111,200 for couples before taxes kick in.
- Utah: With a population of over 3.27 million, Utah has stricter limits—$30,000 for individuals and $50,000 for couples to avoid taxes.
- Vermont: In this Democratic state, individuals must stay below $50,000 and couples under $65,000 to dodge taxes on their benefits.
- West Virginia: West Virginia aims to eliminate taxes on Social Security benefits in the near future, but for 2025, individuals earning over $50,000 and couples making above $100,000 will still be taxed.
Worried about tax hikes and inflation eating into your savings? Consider exploring tax-free savings strategies to safeguard your financial future.
The Landscape of Social Security and Retirement Benefits
As we close in on the end of 2024, remember that 68.4 million Americans rely on Social Security benefits each month. Established nearly 90 years ago in 1935, the SSA oversees several crucial federal programs, including:
- Retirement benefits
- Disability benefits (SSDI)
- Survivor benefits
- Supplemental Security Income (SSI)
- Medicare
The Cost-of-Living Adjustment (COLA): What You Need to Know
Each year, the Cost-of-Living Adjustment (COLA) is applied to benefit amounts based on various eligibility criteria. For 2025, the COLA is set at 2.5%, meaning beneficiaries will see a welcome increase starting January. However, not everyone feels this adjustment is enough to keep pace with the rising cost of living. Economically vulnerable groups, like seniors, often bear the brunt of inflation, leaving many to wonder if the COLA truly reflects their needs.
With numerous changes coming to Social Security policies and benefits in 2025, it’s essential for beneficiaries to stay informed and strategize for their financial future!
