If there are 41 states that don't tax your Social Security benefits, that means there are nine that do. (The District of Columbia does not, by the way.) The fact that the vast majority don't tax it is good news, and there's more good news -- that majority is growing.
When I wrote about this topic just two years ago, only 38 states didn't tax Social Security. More and more states are eliminating this tax, and those that still tax benefits often do so with a light touch.
Image source: Getty Images.
The 41 states that don't tax your Social Security benefits
Here are the 41 states that won't tax your Social Security benefits:
- 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
- Wisconsin
- Washington, D.C.
- Wyoming
The 9 states that do tax Social Security benefits
To save you the trouble of checking to see which states are not listed above, here are the nine states that do tax Social Security benefits:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Each of these states has a different taxing policy, and some of them exclude many retirees. In Minnesota, for example, if Social Security is your only income, you do not have to pay taxes on it.
A bunch of the states above only tax the Social Security benefits of those with relatively high incomes, and some only tax benefits above a certain threshold.
Don't forget Uncle Sam
Unfortunately, while most states don't tax Social Security benefits, the federal government does. Specifically, up to 85% of your benefits may be taxed federally. The table below offers details:
|
Filing As |
Combined Income* |
Percentage of Benefits Taxable |
|---|---|---|
|
Single individual |
Between $25,000 and $34,000 |
Up to 50% |
|
Married, filing jointly |
Between $32,000 and $44,000 |
Up to 50% |
|
Single individual |
More than $34,000 |
Up to 85% |
|
Married, filing jointly |
More than $44,000 |
Up to 85% |
Data source: Social Security Administration. *Your "combined income" is your adjusted gross income (AGI) plus non-taxable interest, plus half of your Social Security benefits.
A future version of this article may carry very different information, though, because some in Washington have suggested ceasing federal taxation of Social Security. (If you like that idea, it can't hurt to let your representatives in Washington know.)
Note, too, that the table above does not indicate a tax rate of 50% or 85% -- you won't see 85% of your benefits lopped off in taxes. Instead, those are the portions of your benefits that might end up being taxed.
Keep taxes in perspective
If you happen to live in one of the few states that does tax your Social Security benefits more than you would like, take a breather before calling a moving company -- because you really need to consider all the taxes you face.
Every state needs revenue in order to operate, and each state does so in a somewhat different manner. Some charge fairly high tax rates on property, while others have steep sales taxes. Some tax income, while others don't. So think about your own situation, and, perhaps, how your state's taxes compare with others'.
If you don't spend much, a steep sales tax may not bother you. If you own valuable real estate, a hefty property tax rate can be punishing. Do your own math before making any decisions -- and remember that for most of us, state taxation of Social Security is nothing to worry about.
