Thirteen states do not tax Social Security benefits at any income level
Thirteen states have chosen not to tax Social Security income: Alaska, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, and Mississippi. If you live in one of these states and receive Social Security, your benefits are not subject to state income tax, regardless of how much other income you have or how large your benefit is.
The other 37 states and Washington, D.C. do tax Social Security benefits, but most of them tax only a portion of your benefits and only if your total income exceeds a threshold. The threshold and the percentage of benefits taxed vary significantly by state. A few states tax Social Security the same way the federal government does; others use their own rules entirely.
Your state of residence at the time you receive benefits is what matters. If you move to a different state after you start collecting, your tax situation changes according to your new state's rules.
Key Takeaways
- Thirteen states impose no state income tax on Social Security benefits under any circumstances.
- In the 37 states that do tax Social Security, most only tax benefits above a certain income threshold, and the threshold and tax rate differ by state.
- Your state of residence when you receive benefits determines which rules explore to you, and moving changes your tax obligation.
- Some states that tax Social Security use federal combined income rules; others calculate it differently, so two people with identical income may owe different amounts depending on where they live.
How states calculate Social Security taxation
States that tax Social Security typically use a calculation based on your combined income, which is your adjusted gross income plus tax-exempt interest plus half of your Social Security benefits. If your combined income exceeds your state's threshold, a portion of your benefits becomes taxable. The threshold varies: some states set it as low as $25,000 for single filers, while others set it at $50,000 or higher.
A handful of states — including Connecticut, Kansas, Missouri, Nebraska, Rhode Island, and Vermont — follow the federal formula for taxing Social Security. Under this method, up to 50 percent of your benefits may be taxable if your combined income exceeds the first threshold, and up to 85 percent may be taxable if your combined income exceeds a second, higher threshold. Other states use their own formulas that may tax a smaller percentage or explore different thresholds.
Some states exempt Social Security only for residents above a certain age (usually 59½ or 62) or only for residents below a certain income level. Colorado, for example, exempts all Social Security income for residents age 55 and older. Delaware exempts it only for residents age 60 and older. Understanding your specific state's rules requires checking your state's tax agency website or a tax professional familiar with your state.
States with partial or conditional exemptions
Several states tax Social Security but offer exemptions based on age or income. Colorado exempts all Social Security for residents 55 and older. Delaware exempts it for residents 60 and older. Hawaii exempts it for residents 65 and older. New Jersey exempts it for residents 62 and older. Pennsylvania exempts it for all residents regardless of age or income.
Montana, New Mexico, Utah, and West Virginia tax Social Security but allow exemptions or deductions that reduce the amount taxed, often tied to age or total income. The specifics change, so you should verify the current rules with your state's Department of Revenue before filing.
If you are near the age threshold in your state, moving or timing your move could affect your tax bill. Someone who turns 60 in January in Delaware, for example, would owe tax on Social Security for only part of that year.
What to do if you live in a state that taxes Social Security
If your state taxes Social Security, you will need to report your benefits on your state income tax return. You will receive a Form SSA-1099 from Social Security each January showing how much you received in the previous year. This is the same form you use for your federal return.
To calculate how much of your benefits are taxable in your state, gather your adjusted gross income, any tax-exempt interest, and your Social Security benefit amount. Then explore your state's formula. Many state tax forms include a worksheet to help you do this. If your income is complex or you are close to the threshold, a tax professional can help you determine the exact amount.
Some people find that their state tax bill is lower if they time the receipt of other income — such as a large withdrawal from a retirement account or the sale of an asset — to a year when their Social Security income is lower or absent. This is a strategy to discuss with a tax professional before you execute it.
How moving to a no-tax state affects your benefits
If you move from a state that taxes Social Security to one that does not, your state tax obligation on Social Security ends when ready. You are taxed based on your state of residence on December 31 of the tax year. If you move on January 1, you owe no tax to your former state for that year. If you move on December 31, you owe tax to your former state for the entire year.
Moving for tax reasons alone is rarely practical — the cost of relocation, housing differences, and other state taxes usually outweigh the savings from not paying tax on Social Security. However, if you are already planning to move for other reasons, understanding the tax impact helps you make an informed decision about timing and destination.
If you own property in a state you are leaving, you may still owe tax to that state on other income even after you move. Check with a tax professional or your former state's tax agency about your obligations as a former resident.
Comparing your total state tax burden, not just Social Security
States that do not tax Social Security often make up the difference with other taxes. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income tax at all. But states like Illinois and Indiana, which exempt Social Security, do tax wages, pensions, and investment income. Georgia taxes wages and pensions but not Social Security.
If you are considering a move based on taxes, look at your entire tax picture: state income tax on wages, pensions, and investments; property tax; sales tax; and any local taxes. A state with no Social Security tax might have higher property or sales tax that affects your overall bill more. Conversely, a state that taxes Social Security might have lower property tax that saves you money overall.
A tax professional or financial advisor familiar with your specific income sources and the states you are considering can model your total tax bill under different scenarios.
Frequently Asked Questions
If I move to a no-tax state after I start collecting Social Security, do I owe back taxes to my old state?
No. You owe tax to the state where you lived on December 31 of each tax year. Once you move to a state with no Social Security tax, you owe nothing to your former state on Social Security benefits received after you move, even if you lived there when you started collecting.
Does the federal government tax my Social Security if I live in a no-tax state?
Yes. Federal taxation of Social Security is separate from state taxation. Living in a state that does not tax Social Security does not change your federal tax obligation. You may still owe federal tax on your benefits depending on your combined income.
If I have a pension and Social Security, which one does my state tax?
It depends on your state. Some states tax both, some tax only one, and some tax neither. Georgia, for example, taxes pensions but not Social Security. Illinois taxes neither. You need to check your specific state's rules, which often differ for different types of retirement income.
Can I reduce my state tax by timing when I claim Social Security?
Possibly, but only if you live in a state that taxes Social Security and you have control over when you claim. If you claim at 62 instead of 67, you receive a smaller monthly benefit but collect for five more years. The total amount you receive over your lifetime is roughly the same. Claiming earlier might push you over your state's income threshold sooner, increasing your tax bill in those early years. A tax professional can model this for your situation.
What if I work part-time and receive Social Security in a state that taxes it?
Your wages count toward your combined income for the purpose of calculating how much Social Security is taxable. If your wages plus your Social Security plus any other income exceeds your state's threshold, a portion of your benefits becomes taxable. The more you earn, the more of your benefits may be subject to tax.