Tax time can be particularly challenging for seniors living on fixed incomes, especially when retirement account withdrawals are not taxed upfront. In addition to federal taxes on Social Security benefits, retirees in certain states may face state-level taxation. Nine states have specific rules regarding Social Security benefit taxation. Colorado allows seniors 65 and older to subtract federally taxable Social Security benefits from state taxable income, subject to income limits. Connecticut exempts Social Security benefits for residents with incomes below specified thresholds. Minnesota exempts some federally taxable benefits based on income. Montana follows federal guidelines for taxing benefits. New Mexico exempts benefits for residents earning below certain limits. Rhode Island offers exemptions for those at full retirement age with incomes under set thresholds. Utah taxes benefits but provides a tax credit, with discussions ongoing about eliminating this tax. Vermont exempts benefits for lower-income residents and offers partial credits for others. West Virginia will phase out its Social Security benefit tax by 2026. Retirees should consult local tax professionals for personalized advice. — news from USA TODAY
