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37 States That Don't Tax Social Security Benefits

By Maurie Backman – Nov 12, 2021 at 5:02AM

Key Points

  • Many seniors rely heavily on Social Security in retirement.
  • Most states won't impose taxes on that income.
  • Even if you move to a state that taxes benefits, there are steps you can take to compensate.

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Most states won't take a chunk of your benefits -- but some will.

Many people do their best to plan and save for retirement, only to be tripped up by one nasty surprise -- taxes. A number of key senior income sources are subject to taxes during retirement, like traditional IRA and 401(k) plan withdrawals, as well as pension payments.

Social Security is another income source that can be taxable -- but not always. At the federal level, taxes on benefits apply to seniors with moderate income or higher. And often, those federal taxes are hard to avoid.

Map of U.S.

Image source: Getty Images.

But steering clear of Social Security taxes at the state level isn't as difficult. That's because most of the 50 states don't impose a tax on benefits, and moving to the right state could help you keep more of that money for yourself.

States that don't tax Social Security

Some states don't have an income tax at all. As such, Social Security benefits can't be touched. But there are plenty of states that charge income taxes but still leave Social Security alone.

If you retire in one of these 37 states, you won't have to worry about your benefits getting taxed at the state level:

  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

Should you avoid states that tax benefits?

It's easy to see why seniors would prefer to avoid having their Social Security income taxed at the state level. But it's also important to realize that some of the states that tax benefits offer other perks, like a general low cost of living and a moderate climate.

Furthermore, you may have the goal of moving closer to your family once you retire. And you shouldn't necessarily let the idea of state-level Social Security taxes stop you from doing that.

For one thing, many of the states that tax benefits also offer exemptions for low and moderate earners. Secondly, there are other steps you can take to lower your overall tax burden in retirement.

For one thing, you can house your retirement savings in a Roth IRA or 401(k). While your contributions to one of these accounts won't score you a tax break, withdrawals will be yours to enjoy tax-free as a senior.

You can also invest in a manner that limits your tax liability. Loading up on municipal bonds, for example, is a good way to secure an income stream of interest payments without being liable for federal taxes. And if you buy municipal bonds issued by your state of residence, those interest payments are exempt from state and local taxes, as well.

Therefore, while it's good to be aware of which states do and don't tax Social Security, you don't necessarily need to make drastic changes to your retirement plans because of that. Even if you do end up losing some of your benefits to state taxes, there are steps you can take to compensate.

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