12 States Where Retirees Could Owe Social Security Benefit Taxes

Social Security checks are a huge help to seniors living on a fixed income, but just like your paychecks during your working years, they're not always all yours. The federal government taxes the Social Security benefits of some seniors, and the following 12 states do as well. Here's how to know if you'll owe your state any of your monthly checks.

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Social Security benefits are taxable in Colorado at the state income tax rate, unless they're also taxed by the federal government. Any benefits you pay federal taxes on reduce your taxable income for the state of Colorado.

For example, if you paid federal benefit taxes on $5,000, you could subtract this $5,000 from your taxable income on your state tax return.

Connecticut residents only owe taxes on their Social Security benefits if their adjusted gross income (AGI) -- their gross income with some deductions -- exceeds certain limits. Single adults and married couples filing separately won't owe any state taxes on their benefits unless their AGI exceeds $75,000. The same goes for married couples filing jointly as long as their AGI is under $100,000.

In addition, Connecticut residents who owe federal taxes on their Social Security benefits may be able to reduce or eliminate the amount of their benefits subject to Connecticut state tax.

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Social Security recipients in Kansas only pay benefit taxes if their federal AGI exceeds $75,000 for the year. Unlike Connecticut, this limit is for all tax filing statuses. There's no separate limit for married couples filing jointly.

Minnesota uses the same rules as the federal government to determine which of its residents owe benefit taxes. It all depends on your provisional income. This is your AGI, plus any nontaxable interest -- which you may have if you own municipal bonds -- and half your annual Social Security benefit.

Individuals with provisional incomes under $25,000 and married couples with provisional incomes under $32,000 won't owe any taxes on their benefits. But some benefits over these limits are taxable at the state's income tax rate.

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Missouri seniors 62 and older won't have to pay taxes on their benefits as long as their AGI is less than $85,000 if filing taxes as single, head of household, married filing separately, or qualifying widow(er). Married couples filing jointly are exempt from Missouri benefit taxes as long as their AGI is under $100,000.

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Like the federal government, Montana doesn't tax the benefits of single filers with provisional incomes under $25,000 or married filers with provisional incomes under $32,000. But it uses a different formula than the federal government to determine how much those with larger provisional incomes must pay in taxes.

The Montana Individual Income Tax Return has a worksheet that can help residents determine how much, if any, of their Social Security benefits the state could tax.

Nebraska taxes some of the Social Security benefits of seniors whose AGI exceeds $59,960 if married filing jointly or $44,460 for single filers. The good news is, Nebraska passed a law in 2022 that will phase out the state's Social Security benefit tax over the next few years. By 2025, Nebraskans won't pay any state taxes on their benefits.

In the meantime, the rules for benefit taxation look a little different every year, and as in all states that tax benefits, the exact amount you'll pay depends on your state tax rate.

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New Mexico has also recently changed its Social Security benefit taxation laws. As of 2022, single filers with AGIs under $100,000 won't owe any benefit taxes. Neither will married couples filing separately with AGIs under $75,000 or married couples filing jointly, heads of household, or qualifying widows or widowers with AGIs under $150,000.

Social Security beneficiaries in Rhode Island typically pay state taxes on all their benefits, unless they qualify for a modification. To do this, you must meet three requirements. First, the federal government must tax some of your benefits. Second, you must be at your full retirement age as defined by the Social Security Administration. This is somewhere between 66 and 67 for today's workers. And third, your AGI must be below a certain threshold, which varies by year and tax filing status.

If you meet all these criteria, you won't have to pay state taxes on the Social Security benefits you've already paid federal taxes on.

ALSO READ: Why October Is a Crucial Month for Seniors on Social Security

Utah is another state that relies upon the federal government's formula to determine how much of your Social Security benefits are taxable. But some residents may qualify for a Social Security benefit credit, which reduces the amount of their checks subject to state tax.

Single adults with modified adjusted gross incomes (MAGIs) under $30,000 and married couples filing jointly with MAGIs under $50,000 won't owe state taxes on their benefits at all. Those with higher incomes may still qualify for a partial Social Security benefit credit.

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Vermont exempts married couples filing jointly with AGIs under $65,000 and all other filers with AGIs under $50,000 from paying taxes on their Social Security benefits. Joint filers with AGIs between $65,000 and $75,000 and other filers with AGIs between $50,000 and $60,000 are eligible for a partial exemption.

West Virginia taxes the Social Security benefits of single filers and married couples filing separately with AGIs of more than $50,000 and married couples filing jointly with AGIs greater than $100,000. If your income exceeds the taxation threshold for your filing status, you'll pay your state income tax rate on all your benefits.

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It might be possible for some seniors in danger of owing benefit taxes to avoid this, but it depends on your state's laws. Reducing spending to keep your AGI down is a smart move if you're able to do so. But sometimes, avoiding benefit taxes isn't possible. In that case, all you can do is prepare yourself and build the taxes into your annual budget.

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