9 States Will Tax Social Security in 2025: Is Montana One of Them?

Social Security is really important for many retirees in the United States. But when these benefits get taxed, it can have a big effect on how much money retirees have.

According to AARP, 40% of people who are 65 and older depend on Social Security for at least half of the money they need to live on during retirement. So, taxes on these benefits can make a big difference in how comfortable retirees are financially.

The State-by-State Taxation Landscape

Taxes on Social Security benefits can be different in each state, which makes things more complicated. Although the federal government can tax up to 85% of these benefits, fewer states are choosing to add extra taxes. In 2025, only nine states are expected to tax Social Security benefits.

Changing Taxation Policies

Recent changes in the law show that the rules for taxing Social Security are changing. Missouri, Nebraska, and Kansas have decided to stop taxing these benefits, which is good news for people living there. But in places like Colorado, Connecticut, and Vermont, retirees still have to pay taxes on their Social Security, making things more difficult for them.

Navigating State Tax Laws

According to financial advisor Brian Kuhn, it's a good idea to look at how much your state taxes your income so you can see how it affects your Social Security money. If you figure out the percentage of tax you pay on all your income and apply that to your Social Security money, you can see how much you might be able to save.

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The Case of Montana: A Call for Change

Montana is one of the states that taxes Social Security benefits. People living in Montana are paying attention to this issue, and many are pushing for the tax policy to be reviewed. For retirees looking to be financially secure after they stop working, the choice made about taxing Social Security in Montana will have a big impact on how well off they are.