Where you live has a huge effect on how much your retirement costs. Most people know that the place you call home influences how much you spend on housing, food, and healthcare. But many don't realize it can also affect how much of your Social Security benefits you get to keep.

Residents of the following 12 states get a bit of a raw deal, as they could wind up giving some of their checks back to the government. Here's what you need to know.

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These 12 states tax the Social Security benefits of some of their seniors

Most states don't tax the Social Security benefits of their seniors, but the following 12 states are the exception to that rule:

  1. Colorado
  2. Connecticut
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Nebraska
  8. New Mexico
  9. Rhode Island
  10. Utah
  11. Vermont
  12. West Virginia

This is disappointing for seniors who live there, but it's important to note that not every Social Security recipient living in these states has to share their checks with the government. Each state sets its own rules about who owes taxes on their benefits and when.

For example, a Kansas resident will only pay taxes on their Social Security benefits if their adjusted gross income (AGI) exceeds $75,000, regardless of their tax filing status (there's no additional AGI wiggle room for joint filers). Those with AGIs below this threshold won't owe the state any of their checks.

If you're unsure whether you could face benefit taxes in retirement, it's a good idea to reach out to your state's department of taxation for more information. Ask about how the state currently taxes senior benefits and whether they have any plans to eliminate that benefit tax in future years.

The federal government may want a piece of your checks, too

Avoiding state Social Security benefit taxes doesn't mean you're out of the woods. The federal government taxes the Social Security benefits of seniors in all states if their provisional income exceeds certain thresholds for their tax filing status.

Provisional income is defined as your AGI plus any nontaxable interest and half your annual Social Security benefit. The table below gives you an idea of how much of your benefit could be taxable:

Percentage of Benefits Subject to Tax

Single Filer

Married Filer


Provisional income under $25,000

Provisional income under $32,000

Up to 50%

Provisional income between $25,000 and $34,000

Provisional income between $32,000 and $44,000

Up to 85%

Provisional income exceeding $34,000

Provisional income exceeding $44,000

Data source: Social Security Administration.

To be clear, this reflects the percentage of your benefits that could be subject to income tax. It doesn't mean the government can take up to 85% of your checks. 

Some seniors may not owe anything, especially if they have substantial Roth savings to help keep their AGIs down. But the government hasn't changed the above thresholds for benefit taxation in decades. With average benefits rising, more and more seniors are likely to encounter this issue as time goes on.

You may be able to reduce your risk of owing these taxes by spending less or relying more heavily on Roth accounts, which allow for tax-free withdrawals. But if this doesn't work, you may have no choice but to budget for these taxes annually. 

Don't forget to keep an eye out for changes to Social Security that could affect how much you owe. If the government makes any alterations to the program, be sure you adjust your retirement strategy accordingly so you're prepared for whatever taxes and costs the future brings.