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.
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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.
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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
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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.
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This article originally appeared on GOBankingRates.com: 41 States Where You’ll Feel the Biggest Social Security Increase This Year
