Many retirees rely on Social Security and Supplemental Security Income (SSI) to help fund their golden years. To help these benefits keep up with inflation, the Social Security Administration (SSA) institutes an annual cost of living adjustment (COLA) to increase how much Americans receive.
Read Next: 41 States That Won’t Tax Social Security Benefits in 2025
Find Out: 4 Low-Risk Ways To Build Your Savings in 2025
For those considering or already receiving benefits from the SSA, it’s important to keep in mind that individual states treat this retirement income differently. While every beneficiary receives the same COLA, some states still tax Social Security income. This can make those beneficiaries in the states that don’t tax their benefits feel like they’re getting more of an increase than others.
Here’s a look at the average benefits and which states will feel like they’re seeing more of an increase than others due to benefits being taxed.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Estimated Payments for 2025
Since Social Security and COLA only increased 2.5% this year, compared to the 3.2% of 2024, this may have felt slim to many beneficiaries. More than 66 million beneficiaries receive Social Security benefits and around 7.5 million receive SSI.
The average monthly benefit estimates for 2025 are as follows:
-
All recipients: $1,840
-
Retired workers: $1,980
-
Nondisabled widow(er) alone: $1,837
-
Disability insurance: $1439
-
All disabled workers: $1,581
Be Aware: 4 Things To Watch for as Elon Musk Takes on Social Security
States That Tax Social Security
Taxing Social Security benefits can reduce the COLA and make it feel like you aren’t getting much of an increase.
The states that do this are Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. As GOBankingRates previously reported, a state with an effective rate of 5% is taking $1,500 of $30,000 in benefits — not an insignificant amount if you’re living on a fixed income.
States That Don’t Tax Social Security
The states that don’t tax Social Security and where you’ll feel that increase the most, are:
-
Alabama
-
Alaska
-
Arizona
-
Arkansas
-
California
-
Delaware
-
Florida
-
Georgia
-
Hawaii
-
Idaho
-
Illinois
-
Indiana
-
Iowa
-
Kentucky
-
Louisiana
-
Maine
-
Maryland
-
Massachusetts
-
Michigan
-
Mississippi
-
Missouri
-
Nebraska
-
Nevada
-
New Hampshire
-
New Jersey
-
New York
-
North Carolina
-
North Dakota
-
Ohio
-
Oklahoma
-
Oregon
-
Pennsylvania
-
South Carolina
-
South Dakota
-
Tennessee
-
Texas
-
Virginia
-
Washington
-
West Virginia
-
Wisconsin
-
Wyoming
Changes To Earnings Limits
A few other changes have happened this year related to Social Security and SSI benefits for those who continue to work while drawing their benefits.
In 2025, the earnings limit for Social Security beneficiaries under full retirement age is $23,400 annually. If you are approaching age 66 or 67, the limit is $62,160 (up from $59,520 in 2024) for the months before reaching FRA. Once you reach full retirement age, there’s no earnings limit. The maximum amount of earnings subject to Social Security tax in 2025 is $176,100.
While the state you live in doesn’t matter in terms of how big your COLA is, whether you get taxed or not will make your benefits more or less robust this year.
Jordan Rosenfeld contributed to the reporting for this article.
More From GOBankingRates
-
5 Types of Vehicles Retirees Should Stay Away From Buying
-
6 Subtly Genius Moves All Wealthy People Make With Their Money
-
4 Things You Should Do if You Want To Retire Early
-
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
This article originally appeared on GOBankingRates.com: 41 States Where You’ll Feel the Biggest Social Security Increase This Year
