Retirement is an exciting milestone in life, but tax surprises could throw a wrench in your plans.

Whether you've already retired or are still in the preparation stage, it's important to understand how taxes can affect your income. Most retirees will be subject to income taxes to some degree in retirement, and there are three specific types of taxes you'll need to be prepared for.

1. State taxes on Social Security

Social Security benefits are not immune to taxes, and depending on where you live, you may owe state income taxes on your monthly checks.

Golden eggs and Social Security card in a nest.

Image source: Getty Images.

Fortunately, there are 38 states that don't tax Social Security. The 12 that do tax benefits include Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.

The good news, though, is that even among states that tax Social Security, most offer some sort of exemption. In Missouri, for example, benefits are exempt from taxes if your adjusted gross income is below $85,000 per year, or $100,000 per year for married couples filing jointly. And Nebraska is phasing out Social Security taxes, with all benefits exempt by 2025.

Regardless of where you live, it's wise to look into how your state taxes Social Security and whether you qualify for an exemption.

2. Federal taxes

Social Security is also subject to federal income taxes, which are calculated based on a figure called your provisional income.

Your provisional income is your adjusted gross income plus half of your annual benefit amount and any nontaxable interest. So, for instance, if you were to withdraw $40,000 per year from your 401(k) and are collecting $20,000 per year from Social Security, your provisional income would be $50,000 per year.

Here's how much of your benefits are subject to federal taxes depending on your provisional income:

Percentage of Your Benefits Subject to Federal Taxes Provisional Income for Individuals Provisional Income for Married Couples Filing Jointly
0% Under $25,000 Under $32,000
Up to 50% $25,000 to $34,000 $32,000 to $44,000
Up to 85% More than $34,000 More than $44,000

Data source: Social Security Administration

No matter how much you're earning, you won't pay federal taxes on more than 85% of your benefit amount. But the only way to avoid taxes on benefits is if your provisional income falls below $25,000 per year (or $32,000 per year for married couples).

Also, these income limits haven't been adjusted since 1984, when Social Security first became taxable. As the general cost of living continues to increase, you could end up paying more in federal taxes over time if these limits remain unchanged.

3. Income taxes on retirement account withdrawals

If you have any savings in a 401(k) or traditional IRA, you'll owe income taxes on the amount you withdraw in retirement. These accounts are tax-deferred, meaning you get a tax deduction up front when you make the contributions, then you'll owe taxes on the withdrawals.

It's especially important to consider taxes if you're retiring early. Withdraw money from a 401(k) or traditional IRA before age 59 1/2, and you'll not only be subject to taxes, but you may also owe an additional 10% penalty.

Roth accounts, such as a Roth 401(k) or Roth IRA, are generally free from taxes in retirement. However, if you've received a company match through a Roth 401(k), those contributions (as well as any earnings on them) will be subject to income taxes upon withdrawal.

You may not be able to entirely avoid taxes in retirement, but you can prepare for them. When you know what to expect, it will be easier to properly budget and enjoy your senior years more comfortably.