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37 States That Don't Tax Social Security Benefits

By Maurie Backman – Oct 28, 2021 at 5:02AM

Key Points

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Is one of these on your list for retirement?

Many seniors are shocked to learn that they don't get to keep all of their Social Security benefits in retirement. That's because those benefits are subject to federal taxes for moderate and high earners. Some lower earners may also have their benefits taxed, depending on their specific income.

But federal taxes on Social Security aren't the only taxes to worry about. Depending on the state you settle down in for retirement, you may be on the hook for additional taxes, too.

There are 13 states that tax Social Security benefits to some degree. The good news, though, is that most states do not impose their own tax on those benefits. So if you want to keep more of that money, you may want to focus on those 37 when deciding where to call home during retirement.

Map of United States.

Image source: Getty Images.

The 37 states that don't tax Social Security

Regardless of what your total retirement income looks like, you won't pay taxes on your Social Security benefits in these 37 states:

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Delaware
  7. Florida
  8. Georgia
  9. Hawaii
  10. Idaho
  11. Illinois
  12. Indiana
  13. Iowa
  14. Kentucky
  15. Louisiana
  16. Maine
  17. Maryland
  18. Massachusetts
  19. Michigan
  20. Mississippi
  21. Nevada
  22. New Hampshire
  23. New Jersey
  24. New York
  25. North Carolina
  26. Ohio
  27. Oklahoma
  28. Oregon
  29. Pennsylvania
  30. South Carolina
  31. South Dakota
  32. Tennessee
  33. Texas
  34. Virginia
  35. Washington
  36. Wisconsin
  37. Wyoming

But does this mean that you should automatically write off the other 13 states for your retirement? Not necessarily.

There are factors you should take into account when deciding where to live during your senior years outside of Social Security taxes. These include:

  • Housing costs and property taxes (along with the general cost of living)
  • Access to healthcare
  • Climate
  • Proximity to family and loved ones
  • Amenities like parks and recreation

While it's true that having an extra bite taken out of your Social Security benefits may not be ideal, the reality is that you can more than make up for that by retiring someplace with affordable housing and healthcare. As such, it's a good idea to do your research before assuming that you shouldn't move to a state that taxes Social Security.

Another thing to keep in mind is that if you're a low or moderate earner, many of the states that tax Social Security offer exemptions you might qualify for. So again, it pays to get all of the facts before writing off 13 states from the get-go.

Prepare for taxes on Social Security

Ideally, Social Security won't be your only income source during retirement. But if it's a big one, you'll need to gear up for taxes and prepare to lose a chunk of those benefits.

You can compensate, though, by securing other retirement income streams that aren't subject to taxes. Roth IRA and 401(k) withdrawals, for example, get tax-free treatment. And if you invest in municipal bonds for retirement, the interest payments you collect during the year will be exempt from federal taxes, and in some cases, state taxes, too.

It definitely stinks to have to pay taxes on Social Security. But if you prepare accordingly, giving up a piece of those payments may not hurt you too badly.

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