38 States That Do Not Tax Social Security Benefits

Stretching a Social Security check far enough to cover basic expenses is a huge challenge for many retirees. According to the Senior Citizens League, Social Security benefits buy about 30% less today than they did in 2000. The reason? Older households spend a disproportionate amount of their budget on things like health care and housing, which are growing at a much faster rate than the rate of inflation that determines cost-of-living adjustments.

If Social Security is a big part of your retirement income, the last thing you want is to shell out part of your benefit for state taxes. Fortunately, 38 states and the District of Columbia won’t touch your benefits.

Image source: Getty Images.

These 38 States Won’t Touch Your Social Security

If you live in one of these 38 states or in the District of Columbia, you won’t have to worry about state social security taxes. Nine of these states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming (note that New Hampshire taxes interest and dividend income). In other states, social security benefits are not considered taxable income.

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Mississippi
  • Nevada
  • New Hampshire
  • New Jersey
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Caroline from the south
  • South Dakota
  • Tennessee
  • Texas
  • Virginia
  • Washington
  • Wisconsin
  • Wyoming

That doesn’t mean you’ll completely avoid taxes on your Social Security checks, though. Benefits are still federally taxable if your income exceeds certain thresholds.

For single filers with income between $25,000 and $34,000, up to 50% of benefits are taxable. Up to 85% of your benefit is taxable if you are a single filer with income over $34,000.

Up to 50% of benefits are taxable for married couples who file a joint return and have combined income between $32,000 and $44,000. Up to 85% of benefits are taxable for couples whose combined income exceeds $44,000.

12 States Where Social Security Is Taxable

In the following 12 states, Social Security benefits are taxable under certain circumstances. However, many states do not tax the benefits on retirees whose income is below certain limits, or they allow retirees to shield a portion of their benefits from state taxes.

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

Should you worry about state social security contributions?

If you’re worried about taxes in retirement, state social security contributions may be a factor in where you spend your golden years. However, it is important to consider the overall tax situation.

Property taxes can weigh heavily on your retirement budget if you live in an area with high housing costs. You should also consider sales taxes and whether your state taxes capital gains and other investment income. Finally, if you have a high net worth, inheritance tax may also be a consideration.

Obviously, you don’t want to cede part of your Social Security benefits to your state government if you don’t have to. But look at your total tax bill to determine which state will become your retirement home.

Comments are closed.