Thirteen states tax Social Security benefits, but most do not
Thirteen states currently tax at least some of your Social Security income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The remaining 37 states and Washington, D.C. do not tax Social Security benefits at all. The federal government also does not tax Social Security for most people, though some higher-income households do pay federal tax on a portion of their benefits.
How much of your benefit gets taxed in these thirteen states depends on your total income, your filing status, and the state's specific rules. A state might tax your benefits only if your income exceeds a certain threshold, or it might exempt benefits below a certain amount. Some states have phased out their taxes on Social Security over time, so the rules continue to shift.
Key Takeaways
- Thirteen states tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
- Each state that taxes Social Security uses different income thresholds and exemption amounts, so your tax bill depends on where you live and how much other income you have.
- The federal government taxes Social Security benefits for some higher-income households, regardless of which state you live in.
- If you move to a state that does not tax Social Security, you will not owe state tax on those benefits starting in your first year of residency there.
How each state taxes Social Security differently
The thirteen states that tax Social Security do not all use the same method. Some states tax your benefits the same way the federal government does — based on your combined income (adjusted gross income plus nontaxable interest plus half your Social Security benefits). Others use their own calculation or income thresholds.
Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia each have their own rules about what counts as income and where the tax kicks in. For example, one state might not tax any benefits if your total income is below $25,000, while another might start taxing at $32,000 or have no income threshold at all. Some states also allow deductions or exemptions that reduce the amount of benefits subject to tax.
Because the rules vary so much, your tax bill in one state could be very different from your bill in another, even if your income is identical. If you receive Social Security and live in one of these thirteen states, your state tax return will ask about your benefits, and you may owe state income tax on them.
Federal taxation of Social Security benefits
The federal government taxes Social Security benefits for some people but not others. If your combined income (your adjusted gross income plus nontaxable interest plus half your Social Security benefits) exceeds $25,000 for single filers or $32,000 for married couples filing jointly, you may owe federal tax on up to 85 percent of your benefits.
This federal tax applies regardless of which state you live in. Even if you live in a state that does not tax Social Security, you could still owe federal tax if your income is high enough. The federal tax is separate from any state tax you might owe.
Most people who receive only Social Security and have little other income do not pay federal tax on their benefits because their combined income stays below the threshold. But if you have a pension, wages, investment income, or other sources of income, your combined income may push you into the range where federal taxation applies.
Income thresholds and what counts as income
Each state that taxes Social Security sets its own income threshold — the point at which your benefits become taxable. These thresholds vary widely. Some states have no threshold at all, meaning benefits could be taxable at any income level. Others set thresholds at $32,000, $37,500, or other amounts.
What counts toward that threshold also differs by state. Most states that tax Social Security count wages, pensions, interest, dividends, and capital gains. Some states exclude certain types of income or allow deductions that reduce your taxable income. A few states count only your Social Security benefits and ignore other income entirely.
Because the rules are specific to each state, you cannot assume that your income level in one state will produce the same tax result in another. If you are considering a move or already live in one of these thirteen states, you may want to review your state's specific rules about Social Security taxation.
States that have eliminated or reduced Social Security taxes
Several states that once taxed Social Security benefits have reduced or eliminated those taxes in recent years. Illinois, Iowa, and Pennsylvania no longer tax Social Security benefits, though they did in the past. Other states have raised their income thresholds or expanded exemptions, making it less likely that retirees will owe tax on their benefits.
These changes happen through state legislation, so the rules can shift from year to year. If you live in one of the thirteen states that currently tax Social Security, it is worth checking your state's tax authority website or speaking with a tax preparer to confirm the current rules, because they may have changed since you last filed.
How to find your state's specific rules
Your state's department of revenue or tax authority publishes the rules for Social Security taxation. You can find this information on your state's official tax website, usually under a section about income tax or retirement income. The website will explain the income thresholds, what counts as income, and any exemptions or deductions available to you.
If you file a state income tax return, your state tax form or instructions will also explain how to report Social Security benefits. Some states ask you to report the full amount of benefits you received and then calculate the taxable portion based on your income. Others ask you to report only the taxable portion.
If you are unsure whether you owe state tax on your Social Security benefits, you can contact your state's tax authority directly or work with a tax preparer who is familiar with your state's rules. Many states also offer free tax preparation services for people with lower incomes.
Moving to a different state and Social Security taxes
If you move from a state that taxes Social Security to one that does not, you will not owe state tax on your benefits starting in the year you establish residency in the new state. Your state of residence for tax purposes is typically the state where you live for the majority of the year or where you have a permanent home.
If you move from one state that taxes Social Security to another state that also taxes it, your tax bill may change because the rules are different. The state you move to will use its own thresholds and calculation methods, which could result in a higher or lower tax on your benefits.
Some people consider moving to a state without Social Security taxation as part of their retirement planning. If you are thinking about relocating, it is worth comparing not just Social Security taxes but also other state taxes, cost of living, and healthcare access in the states you are considering.
Frequently Asked Questions
Do I have to pay federal tax on my Social Security benefits?
Only if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly). Combined income includes your adjusted gross income, nontaxable interest, and half your Social Security benefits. Most people who receive only Social Security do not pay federal tax on their benefits.
If I live in a state that does not tax Social Security, do I still owe federal tax?
Yes, federal tax is separate from state tax. You could live in a state with no Social Security tax and still owe federal tax if your combined income is high enough. The federal threshold applies regardless of where you live.
Can I reduce my Social Security taxes by moving?
Moving to one of the 37 states that do not tax Social Security could reduce your state tax bill, but it will not affect your federal tax. You would also need to consider other state taxes, cost of living, and other factors that affect your overall tax situation.
What if my state's rules changed since I last filed?
State tax rules do change. Check your state's tax authority website or your state tax form instructions each year to confirm the current rules. Some states have raised thresholds or expanded exemptions in recent years, which could affect what you owe.
How do I report Social Security benefits on my state tax return?
Your state tax form and instructions will explain where to report your benefits. Some states ask for the full amount you received; others ask only for the taxable portion. Your state's tax authority website has detailed instructions for your specific state.