From September onwards, many US retirees in Connecticut, Colorado, Montana, Minnesota, New Mexico, Rhode Island, Utah, Vermont, and West Virginia could start receiving smaller monthly Social Security checks, by up to $200, due to a tax hike these states will impose on the benefits.
The remaining 41 states don't impose income taxes on Social Security benefits. Nearly 40% of Social Security benefit recipients pay federal or state taxes on their checks, primarily because they earn considerable income in addition to their Social Security payments. The new tax hike on Social Security benefits will be deducted from the recipients in these states when they file federal tax returns.
