In contrast to the common misunderstanding, Social Security benefits
can
Social Security recipients with significant additional income sources may find up to 85% of their benefits subject to taxation. Actually, taxes levied on Social Security benefits constitute a considerable portion of the program’s funding.
The positive aspect is that generally, Social Security isn’t subject to taxation at the state level. Out of 50 states, approximately 41 don’t impose taxes on Social Security income. Furthermore, many of these states with taxation policies apply much more lenient guidelines compared to those set forth by the federal government.
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41 states that do not impose taxes on Social Security benefits
I’ll cut right to the chase. Should your state be on this alphabetical list, it does not impose any taxes:
Social Security benefits
for the 2025 tax year:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- 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 (state and D.C.)
- Wisconsin
- Wyoming
If your state is listed here, your Social Security income is exempt from state income tax, irrespective of the amount of extra retirement income you may have or whether you do or do not qualify.
still working
.
Certainly, some states do not impose any income tax at all. However, in certain situations, the exemption for Social Security benefits can provide significant savings. Take, for instance, someone who receives an annual $20,000 from Social Security and resides in my home state of South Carolina with its highest marginal tax rate of 7%. This person might save up to $1,400 each year.
Additionally, this list is expected to expand over the coming years. As an illustration, West Virginia is gradually eliminating taxes on Social Security benefits with plans for them to disappear completely by 2026.
What would happen if you reside in one of the remaining nine states?
Given the information from the preceding section, we can see that nine states continue to impose taxes on Social Security benefits at varying levels. These states include Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
In many instances, though, the guidelines governing Social Security taxation are much more lenient compared to those enforced by the IRS. For instance, Colorado imposes taxes on Social Security benefits solely for recipients younger than 65 whose income exceeds specific thresholds.
Simply one aspect of the tax calculation.
If you’re a retiree living in one of the nine states that levy taxes on Social Security benefits, it may seem like an unlucky situation. However, remember that this factor alone doesn’t determine whether a state is tax-friendly overall; often these same states have comparatively low rates for other forms of taxation.
For instance, Montana imposes a tax on Social Security benefits for certain residents yet stands among only five states without a state sales tax. Some other states featured here boast property taxes significantly lower than the nationwide average.
In essence, although being taxed on your Social Security benefits is far from ideal, it’s crucial to take into account the overall taxation landscape of a state.
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