Massachusetts does not tax Social Security benefits

Massachusetts is one of 13 states that does not tax Social Security income at the state level. If you receive Social Security retirement, survivor, or disability benefits and live in Massachusetts, you will not owe state income tax on those payments, regardless of your total income or filing status.

The federal government may still tax your Social Security benefits depending on your combined income — a calculation that includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. But Massachusetts itself takes no portion of your Social Security payments as state tax.

Key Takeaways

  • Massachusetts does not tax Social Security benefits at the state level, so you will not owe Massachusetts income tax on these payments.
  • The federal government may still tax your Social Security benefits if your combined income exceeds certain thresholds, even though Massachusetts does not.
  • You may still need to file a Massachusetts tax return if you have other income sources, even if your Social Security is not taxed.
  • If you moved to Massachusetts from another state that taxes Social Security, your state tax liability on these benefits changes when ready upon establishing residency.

How federal taxation of Social Security works

While Massachusetts does not tax Social Security, the federal government uses a formula based on your "combined income" to determine whether your benefits are taxable. Combined income is calculated by adding your adjusted gross income, any nontaxable interest you earned, and half of your Social Security benefits for the year.

If your combined income exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly, up to 50 percent of your benefits may be subject to federal income tax. If your combined income exceeds $34,000 as a single filer or $44,000 as a married couple filing jointly, up to 85 percent of your benefits may be taxed at the federal level.

These federal thresholds have not changed since 1984, so more beneficiaries fall into taxable ranges each year as incomes rise. Massachusetts residents still use these same federal thresholds when filing their federal return, but they report no state tax on the Social Security portion.

What counts as income for the combined income calculation

Combined income includes wages, self-employment income, interest, dividends, capital gains, rental income, and distributions from retirement accounts like traditional IRAs and 401(k)s. It also includes income from pensions and annuities. Nontaxable interest — such as interest from municipal bonds — is added back in for this calculation even though it is not taxable income.

Roth IRA distributions do not count toward combined income if they are may have access to distributions. Roth conversions do count, however, because the converted amount is treated as income for that year. If you are deciding whether to take distributions from different accounts, the impact on your combined income threshold can affect how much of your Social Security becomes taxable.

Filing requirements if you receive Social Security in Massachusetts

You may still need to file a Massachusetts tax return even though Social Security is not taxed by the state. Massachusetts requires you to file if your total income from all sources exceeds the filing threshold for your age and filing status. The threshold changes each year and is higher for people age 65 and older.

If your only income is Social Security, you typically will not need to file a Massachusetts return. If you have wages, retirement account distributions, pension income, or other income sources, you should check the current filing threshold to determine whether you must file. Filing even when not required can be worthwhile if you have taxes withheld from other income sources, because you may receive a refund.

How to report Social Security on your Massachusetts return

When you file your federal return, you report your Social Security benefits on Form SSA-1099, which the Social Security Administration sends you each January. The amount shown on that form goes on your federal return and determines whether any portion is taxable at the federal level.

On your Massachusetts return, you do not report Social Security as income. If you file a Massachusetts return for other income, you straightforward exclude the Social Security amount. Your federal return and your Massachusetts return will show different taxable income figures because of this difference — that is normal and correct.

Moving to Massachusetts from a state that taxes Social Security

If you moved to Massachusetts from a state that taxes Social Security benefits — such as Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, or Vermont — your state tax treatment changes on the date you establish Massachusetts residency. You will not owe tax to your former state on Social Security received after you move, though you may owe tax on benefits received before the move date.

Contact your former state's tax authority to determine whether you need to file a final return there and whether any portion of the year's Social Security is taxable in that state. Some states prorate the year based on the date you left, while others tax the full year's benefits if you were a resident on January 1.

Frequently Asked Questions

Do I need to pay Massachusetts tax on my Social Security if I work part-time?

No. Massachusetts does not tax Social Security benefits regardless of whether you have other income. However, your wages from part-time work are subject to Massachusetts income tax, and those wages may push your combined income high enough that some of your Social Security becomes taxable at the federal level.

What if I receive both Social Security and a pension?

Massachusetts does not tax either Social Security or pension income at the state level. However, both count toward your combined income for the federal calculation, which may cause some of your Social Security to be taxed federally. You will not owe Massachusetts tax on either payment.

Do I need to file a Massachusetts return if I only have Social Security income?

Usually not, unless your total income from all sources exceeds the filing threshold for your age and filing status. Check the current threshold on the Massachusetts Department of Revenue website. If Social Security is your only income, you will fall below the threshold in most cases.

Can I deduct Social Security taxes I paid while working?

No. Social Security taxes paid during your working years cannot be deducted on your income tax return. The amount you receive in benefits is based on your earnings record, but the taxes themselves are not recoverable through deductions.