An analysis of the 41 states in the United States reveals that they will not impose taxes on Social Security benefits for recipients in 2025. Currently, only nine states—Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia—will continue to tax these benefits as the new year approaches. This information is especially relevant for individuals considering their financial situation as they plan for retirement.
For the approximately 68 million Americans who receive Social Security benefits monthly, choosing one of the 41 states that exempt these benefits from taxation could be a prudent decision. However, prior to making any relocation choices, it is essential to assess the cost of living in each of these states to ensure that the move aligns with financial goals and lifestyle preferences.
Explore the Cost of Living in Different States
For those exploring tax-friendly options, here is a comprehensive list of the states that will not impose taxes on Social Security benefits in 2025.
Alaska
- Annual cost of living after Social Security: $49,916
- Annual housing cost: $14,124
- Annual utilities cost: $6,307
- Annual groceries cost: $6,068
- Annual healthcare cost: $11,544
Arizona
- Annual cost of living after Social Security: $41,475
- Annual housing cost: $15,024
- Annual utilities cost: $4,283
- Annual groceries cost: $4,893
- Annual healthcare cost: $7,057
Arkansas
- Annual cost of living after Social Security: $28,755
- Annual housing cost: $8,757
- Annual utilities cost: $3,842
- Annual groceries cost: $4,557
- Annual healthcare cost: $6,650
California
- Annual cost of living after Social Security: $61,422
- Annual housing cost: $24,518
- Annual utilities cost: $5,752
- Annual groceries cost: $5,387
- Annual healthcare cost: $7,970
Delaware
- Annual cost of living after Social Security: $35,924
- Annual housing cost: $11,341
- Annual utilities cost: $4,147
- Annual groceries cost: $4,888
- Annual healthcare cost: $7,668
Florida
- Annual cost of living after Social Security: $37,196
- Annual housing cost: $12,674
- Annual utilities cost: $4,486
- Annual groceries cost: $5,022
- Annual healthcare cost: $7,585
Georgia
- Annual cost of living after Social Security: $30,374
- Annual housing cost: $9,319
- Annual utilities cost: $3,982
- Annual groceries cost: $4,687
- Annual healthcare cost: $7,532
Hawaii
- Annual cost of living after Social Security: $85,243
- Annual housing cost: $36,619
- Annual utilities cost: $7,472
- Annual groceries cost: $5,953
- Annual healthcare cost: $9,199
Idaho
- Annual cost of living after Social Security: $36,040
- Annual housing cost: $11,797
- Annual utilities cost: $3,321
- Annual groceries cost: $4,965
- Annual healthcare cost: $7,352
Illinois
- Annual cost of living after Social Security: $31,530
- Annual housing cost: $9,611
- Annual utilities cost: $4,151
- Annual groceries cost: $4,687
- Annual healthcare cost: $7,532
Indiana
- Annual cost of living after Social Security: $29,796
- Annual housing cost: $9,096
- Annual utilities cost: $3,829
- Annual groceries cost: $4,682
- Annual healthcare cost: $7,336
Iowa
- Annual cost of living after Social Security: $29,680
- Annual housing cost: $8,780
- Annual utilities cost: $3,961
- Annual groceries cost: $4,639
- Annual healthcare cost: $7,261
Choosing to live in one of the 41 states that do not tax Social Security benefits can significantly enhance your financial situation during retirement. It’s essential to consider the cost of living in these states to ensure your budget aligns with your lifestyle needs. Making informed decisions can lead to a more stable financial future.