Thirteen states tax Social Security benefits, but most do not

Thirteen states currently tax at least some Social Security income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. However, the way each state taxes it varies widely. Some tax only the portion of your benefits that the federal government counts as taxable income. Others use their own rules. A few states exempt certain ages or income levels. If you receive Social Security and live in one of these states, you may owe state tax on part of your benefits — but you may not, depending on your total income and filing status.

The other thirty-seven states, plus the District of Columbia, do not tax Social Security benefits at all. This means your state tax liability depends entirely on where you live, not on how much you receive or how old you are. Understanding your state's specific rules is the only way to know whether you need to set aside money for state taxes or adjust your withholding.

Key Takeaways

  • Thirteen states tax Social Security benefits in some form, while thirty-seven states do not tax them at all.
  • Each state that taxes Social Security uses different rules about how much of your benefit is taxable and who is exempt.
  • Your total income from all sources determines whether your Social Security is taxable in your state, not just the benefit amount itself.
  • If you move to a different state after retirement, your Social Security tax liability may change even though your benefit amount stays the same.
  • Your state tax return will show whether you owe tax on Social Security; the IRS does not collect state tax.

How each state's tax rules differ

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia all tax Social Security, but none of them tax it the same way. Some states follow the federal formula — they tax the same portion of your benefit that counts as taxable income on your federal return. Others use their own income thresholds and percentages. A few states exempt people over a certain age, usually 55 or 62. Some exclude military pensions or federal employee pensions from the income calculation that determines whether your Social Security is taxable.

For example, Colorado taxes up to 85 percent of your Social Security benefit if your total income exceeds certain thresholds, but only if you are under 55 years old. Connecticut taxes up to 75 percent of benefits for people with higher incomes, but exempts residents age 60 and older. Kansas taxes the same percentage as the federal government does, which depends on your combined income. Montana taxes up to 85 percent of benefits but allows a deduction based on your age. You need to check your specific state's rules because assuming one state works like another will lead to an underpayment or overpayment.

What income counts toward the tax threshold

Most states that tax Social Security use "combined income" to determine how much of your benefit is taxable. Combined income typically means your adjusted gross income plus tax-exempt interest plus half of your Social Security benefit. This is the same calculation the federal government uses. However, some states add or subtract different items. A few states count only Social Security and certain other income, ignoring investment gains or pension income entirely.

The thresholds vary by filing status. A married couple filing jointly usually has a higher threshold than a single filer, meaning a couple can have more total income before any Social Security becomes taxable. If you are married filing separately, the threshold is often much lower or zero, which means some or all of your Social Security may be taxable even at modest income levels. Before you file, add up your income from all sources — wages, pensions, interest, dividends, rental income, and half your Social Security benefit — to see whether you cross your state's threshold.

States that do not tax Social Security at all

Thirty-seven states do not tax Social Security benefits under any circumstances. These states are: Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming, and the District of Columbia.

If you live in one of these states, you will not owe state tax on your Social Security benefit, regardless of how much other income you have. You will still owe federal tax on your Social Security if your combined income is high enough, but state tax is not a concern. This is one reason some retirees choose to move to states with no Social Security tax, though you should also consider property taxes, sales taxes, and the cost of living in your target state before making that decision.

How to determine what you owe

Start by finding your state's specific rules. Your state tax agency website will have a page on Social Security taxation, or you can call their taxpayer information line. Write down your state's income thresholds, the percentage of benefits that can be taxed, and any age exemptions. Then calculate your combined income: your adjusted gross income from your federal tax return, plus any tax-exempt interest, plus half your Social Security benefit.

Compare your combined income to your state's threshold. If you are below the threshold, none of your Social Security is taxable in your state. If you are above it, your state will tell you how to calculate the taxable portion — usually a formula based on how far above the threshold you are. You may be able to use a worksheet on your state's tax form, or you may need to do the calculation by hand. If the math is complex, a tax preparer who knows your state's rules can do this for you and may support you do not overpay or underpay.

What happens if you move between states

If you move from a state that taxes Social Security to one that does not, or vice versa, your tax liability changes when ready. Your Social Security benefit amount stays the same, but the state tax you owe does not. You will file a resident return in your new state for the year you move, and possibly a part-year resident return in your old state, depending on when you moved and your state's rules.

If you move mid-year, you may owe tax to your old state on the portion of the year you lived there, and you will not owe tax to your new state if it does not tax Social Security. Some states allow credits for taxes paid to another state, but not all. If you are planning to move in retirement, contact both states' tax agencies to understand how the transition will affect your return and whether you need to make estimated tax payments in your new state.

Federal tax on Social Security still applies

Even if your state does not tax Social Security, the federal government may. The IRS taxes Social Security benefits based on your combined income, using the same formula most states use. If your combined income exceeds $25,000 (single) or $32,000 (married filing jointly), you may owe federal tax on up to 85 percent of your benefit. This is separate from state tax and is calculated on your federal Form 1040.

You will report your Social Security income on your federal return whether or not you owe tax on it. The Social Security Administration sends you a Form SSA-1099 each January showing how much you received in the prior year. You use this amount to fill out your federal return. If you expect to owe federal tax on your Social Security, you can ask Social Security to withhold taxes from your benefit, or you can make estimated tax payments to the IRS quarterly.

Frequently Asked Questions

If I move to a state that does not tax Social Security, will my past state tax bills go away?

No. You owe tax to the state where you lived when you earned the income. Moving does not erase prior-year tax obligations. However, if you moved during the year, you will file a part-year resident return in your old state and will not owe tax to your new state on Social Security if it does not tax it.

Can I reduce my state tax on Social Security by taking less of my benefit?

No. You cannot choose to receive less Social Security to lower your taxes. Your benefit amount is set by your earnings record and age. However, if you have not yet claimed, delaying your claim will increase your monthly benefit, which may push you over your state's tax threshold — something to consider when deciding when to claim.

Does my state tax my spouse's Social Security differently than mine?

If you are both receiving benefits and file jointly, your combined income determines the tax on both benefits together. Your state does not tax each benefit separately. If you file separately, each of you is taxed based on your individual combined income, which usually results in more tax owed overall.

What if I worked in one state but retired to another — which state taxes my Social Security?

The state where you live when you receive the benefit is the one that may tax it. Where you worked does not matter for Social Security tax purposes. Your residency at the time you file determines which state's rules explore.

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

That depends on your state and your total income. Some states require you to file if you have any Social Security income above a certain amount. Others do not require a state return if your only income is Social Security below the threshold. Check your state's filing requirements, which are usually on the state tax agency website or in the instructions to the state tax form.