Editor's note: This article has been corrected. On June 21, the Kansas governor signed a law eliminating the state tax on Social Security income.
The safety net that Social Security provides for millions of people is why it's one of the U.S.'s most important social programs. You may not like seeing Social Security taxes being taken from your paychecks during your career, but there's comfort in knowing you'll reap some of the benefits on the backend in retirement.
Unfortunately, like other forms of income, Social Security benefits may be subject to taxes. Most people won't have to worry about losing some of their checks, but a portion of retirees will.
Image source: Getty Images.
States that don't tax Social Security benefits
Let's start with the good news, which is that most states don't tax Social Security benefits. Below are the 41 states that, along with Washington, D.C., don't:
- 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
States that have Social Security tax rules
There are nine remaining states with Social Security tax rules:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Each state has its own respective rules regarding whether and how it taxes Social Security, so it's vital to be aware of your state's specific laws.
For example, retirees in Colorado who are 65 and older can deduct all of their Social Security benefits from their state income tax, and those 55 to 64 can deduct up to $20,000 in retirement income. Minnesota taxes the same amount that's taxed federally. And in Utah, everyone pays a flat 4.55% tax.
Even if you're living in one of these nine states, you may not always be subjected to taxes. States are constantly changing their rules and, more often than not, making them more recipient-friendly.
Colorado, for example, is expanding its exemption to people 55 to 64 in 2025 if their adjusted gross income (AGI) is $75,000 or less for single filers or $95,000 for couples filing jointly. States like Missouri and Nebraska taxed Social Security benefits until this year, and West Virginia wants to do away with its tax by 2026.
Avoiding state taxes doesn't mean you'll avoid federal taxes
If you know Uncle Sam, then you know he's always out to get his cut. Regardless of your state's specific Social Security rules, federal rules apply to everyone.
To calculate your tax bill, the IRS uses your "combined income," which includes your AGI, any nontaxable interest, and half of your yearly Social Security benefits. For example, if your AGI is $50,000, you receive $20,000 in yearly Social Security benefits, and you have $500 in nontaxable interest, your combined income would be $65,500.
Here's how the IRS could tax your benefits based on combined income and filing status.
| 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 |
Data source: Social Security Administration.
Please note that the above percentages aren't how much of your benefits are taxed, just how much is eligible to be taxed. This eligible portion is then added to your other income and taxed at your regular income tax rate.
As an example, let's imagine a married couple whose combined income is above $44,000, receiving $40,000 yearly in Social Security benefits, and in the 22% tax bracket. Instead of being taxed $34,000 ($40,000 * 85%), the $34,000 would be added to their taxable income and then taxed at 22%, sparking a $7,480 tax bill.
Part of properly planning your retirement finances is knowing just what to expect from your Social Security benefit. It can help avoid a situation where you plan for one amount and receive another.
