41 States That Don't Tax Social Security Benefits -- Soon That Number Will Be 42

A lot varies in the United States depending on which state you're in. Local cuisines, for example, can vary significantly, and driving laws differ as well. Then there's taxation. There are federal tax laws that apply to us all, but each state taxes its residents differently. When it comes to Social Security benefits, most states don't tax them (though the federal government does), but a few do.

Here's a look at which states don't tax Social Security benefits. (If your state is not among them, you may still not have your benefits taxed.)

Image source: Getty Images.

Average Social Security benefits

Let's set the stage by reviewing the amount of money we're talking about first. Know that the average monthly Social Security benefit for retirees was $2,010, or close to $24,000 for the year, as of September. That's just an average, though; if your earnings were above average in your working life, you can expect higher-than-average benefits. Still, even the maximum Social Security benefit isn't as generous as you might think, at $5,251 per month (about $63,000 for the year) -- and very few people will qualify for it.

To get an idea of how much you can expect to receive from Social Security, set up a my Social Security account at the Social Security Administration (SSA) website. Then you'll be able to pop in anytime for the latest estimates of your future benefits.

41 states don't tax Social Security

Fully 41 states -- plus the District of Columbia -- don't tax Social Security benefits. Here they are:

• 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

Which states don't tax Social Security benefits?

That's a long list, and it might have you wondering which states do tax Social Security benefits. Here they are:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

There are nine taxing states right now, but West Virginia plans to stop taxing benefits starting in 2026. So soon there will be only eight.

Even if you live in one of these states, though, your benefits may still escape state taxation, because most of those states tax only some benefits, depending on residents' ages and/or incomes.

For example, in Montana, benefits were recently partially taxed based on income levels and were exempt for incomes below $25,000 for single people and below $32,000 for those who are married and file jointly. And in New Mexico, most seniors' benefits are not taxed at all, as those singles earning less than $100,000 and married couples filing jointly with incomes under $150,000 are exempt.

The federal government still taxes Social Security benefits

Unfortunately, the federal government does tax some Social Security benefits. Still, many retirees escape this tax, too. Specifically, up to 85% of your benefits may be subject to federal taxation. The table below offers details:

Source: Social Security Administration.
*Your combined income is your adjusted gross income (AGI) plus nontaxable interest, plus half of your Social Security benefits.

Trouble ahead?

All the above is mostly pretty good news. However, there are some concerning issues regarding Social Security at present. Primarily, this is the case: Social Security's coffers are shrinking, and if no action is taken, retirees may receive reduced benefits in a few years. There are, however, multiple ways to strengthen the program -- as long as Congress has the will to do so.

But, for now, enjoy the fact that you'll likely pay little in the way of state taxes on your Social Security benefits.