SOME Americans are getting less cash from their Social Security benefits.
The decrease happens for a crucial reason, but there is a way to get the excess money back.
At least 69 million people nationwide get monthly payments from the Social Security Administration (SSA) in 2025.
Financial experts urge them to find ways to supplement those funds through savings and investments, but many still depend on the distributions for their livelihood.
That being said, it’s vital to many recipients that they receive the most money possible from their benefits.
Unfortunately for those who reside in nine states, some money is taken from their Social Security payments for state income taxes, per USA Today.
THE NINE
Those states include Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Specific tax rules vary from state to state, so residents must verify their options with a tax professional.
In Utah, there isn’t much of a way around it.
Social Security recipients pay a flat 4.55% income tax rate on their benefits.
Connecticut residents, however, can deduct all of their federally taxable Social Security income when filing tax returns if their adjusted gross income (AGI) is below $75,000 as a single filer or $100,000 as a married couple.
There are also some adjusted rules in Colorado.
Recipients in the state over 65 can deduct all federally taxed Social Security, but those 64 or younger can only deduct up to $20,000 worth of benefits from taxable income.
Aside from the nine aforementioned states, the remaining 41 do not tax Social Security benefits on a state level.
They aren’t completely off the hook though, depending on some other details.
The Internal Revenue Service (IRS) determines federal taxes owed based on combined income, which includes AGI, half of yearly Social Security benefits, and nontaxable interest.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here's how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
401(k) Plans A 401(k) is a retirement account offered through employers, where contributions are tax-deferred. Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings. Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority. IRAs An Individual Retirement Account (IRA) offers another avenue for retirement savings. Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices. Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.It’s then decided, based on that information, how much of the Social Security Benefits are eligible to be taxed.
INCOME BREAKDOWN
Single filers who get less than $25,000 annually from Social Security don’t have any taxable benefits.
The same goes for married or joint filers making less than $32,000.
Those single filers making $25,000 to $34,000 from Social Security benefits could face taxes on at least 50% of that total.
For joint filers with income between $32,000 and $44,000 from Social Security, it’s also 50%.
Any single filers making more than $34,000 per year from Social Security benefits could see taxes on up to 85% of that income.
For joint filers, it’s the same at $44,000 and above.
It’s important to remember that this is just how much of the Social Security benefits are eligible to be taxed, not how much they actually are or will be taxed.
Overall, it’s not a terrible situation for many Americans.
Most lower-income Social Security recipients who live in the 41 states where there aren’t state-level taxations on benefits won’t pay any at all.
At least four states could also pay out benefits to residents for over 50 years.
There’s also an optimal age for Americans to start taking Social Security distributions, according to experts — and it’s not 62.
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