Not many people start shouting with joy when they pay taxes, but they're necessary in a functioning society. There are taxes on purchases, property, income, and plenty of other financial transactions.
Regarding income taxes, it's not just the paycheck from your job that can be taxed, either. Social Security benefits are also subject to taxes. Whether or not you're taxed (and how much) depends a lot on where you reside.
If you currently receive Social Security retirement benefits (or will be receiving them soon), below is what you should know about which states may tax your benefits and how they work on the federal level.
Image source: Getty Images.
The states that do not tax Social Security benefits
Social Security recipients will be happy to hear that most states do not tax benefits. Below are the 41 states (along with Washington, D.C.) that currently do not:
- 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
- Wyoming
Missouri, Nebraska, and Kansas are the newcomers to the list, having eliminated their tax in 2024.
The states that do tax Social Security benefits
Unfortunately, this still leaves a good chunk of recipients who may possibly face Social Security taxes on the state level:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
If you live in one of these states, it's important to check its specific tax rules because they vary and can also change. For example:
- Recipients in Utah pay the state's flat 4.55% income tax rate.
- Recipients in Connecticut can deduct all of their federally taxable Social Security income if their adjusted gross income (AGI) is below $75,000 for single filers and $100,000 for married couples filing jointly.
- In Colorado, recipients over 65 can deduct all of their federally taxed Social Security, while people 64 and younger can deduct up to $20,000 of benefits from their taxable income.
State rules don't mean you're exempt from federal taxes
Social Security recipients in the 41 listed states above are off the hook for state taxes on their benefits, but there's still a chance you may have to pay Uncle Sam.
The IRS determines your tax bill based on your combined income, which includes your adjusted gross income (AGI), half of your annual Social Security benefit, and any nontaxable interest you receive (such as from certain bonds).
For example, if your AGI is $25,000, you receive $20,000 annually from Social Security, and you have $500 in nontaxable interest, your combined income would be $35,500 ($25,000 + $10,000 + $500).
Based on your combined income, Social Security uses the following ranges to decide how much of your benefits are eligible to be taxed.
| Percentage of Taxable Benefits Added to Income | Filing Single | Married, Filing Jointly |
|---|---|---|
| 0% | Less than $25,000 | Less than $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 |
Source: Social Security Administration.
How Social Security taxes work on the federal level
The percentages in the table aren't how much your Social Security benefits will be taxed; just how much are eligible to be taxed. The taxable portion is added to your other income and then taxed at the applicable rate.
To see it play out, let's assume: (1) you're married, filing jointly; (2) your combined income is $40,000; and (3) you receive $20,000 in annual Social Security benefits.
Your $20,000 in benefits won't be taxed at 50%, but up to 50% would be added to your other income and then taxed at your regular income tax rate.
The structure of federal taxes on Social Security works out in recipients' favor because only a portion is taxable, and most lower-income recipients won't pay any at all.
