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, West Virginia, and Illinois. Each state has its own rules about who pays tax and how much of the benefit is taxable. The other 37 states do not tax Social Security benefits at all, regardless of your income level.

Whether you owe state tax on your benefits depends on three things: which state you live in, how much total income you have, and whether your state uses federal taxable income or a different calculation. A person with the same Social Security check and the same other income might owe nothing in one state and several hundred dollars in another.

Your federal tax situation and your state tax situation are separate. You might owe federal tax on your benefits but no state tax, or vice versa. The federal government taxes benefits based on your combined income (Social Security plus other sources), but states that tax benefits use different thresholds and formulas.

Key Takeaways

  • Thirteen states tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, and Illinois.
  • Each state that taxes benefits sets its own income threshold and determines what portion of your benefit is taxable, so the same income produces different tax bills in different states.
  • Eight states exempt all benefits for people who reach a certain age, ranging from 59 to 67 depending on the state, which means most older retirees in those states pay no state tax on benefits.
  • Your state tax on benefits is separate from your federal tax on benefits — you may owe one, both, or neither depending on your state and income.

How each state calculates taxable Social Security income

Colorado taxes Social Security benefits as ordinary income once your federal adjusted gross income exceeds $25,000 (single filers) or $32,000 (married filing jointly). The amount taxed is the same as the federal amount — if the IRS says 85 percent of your benefit is taxable, Colorado taxes 85 percent. Colorado has no age exemption, so this rule applies at any age.

Connecticut taxes benefits based on federal taxable income thresholds of $25,000 (single) or $32,000 (married). If you exceed the threshold, up to 50 percent of your benefits become taxable. Connecticut also allows a $75,000 exemption for people age 62 and older, which means most retirees in that age group pay no state tax on benefits.

Kansas taxes the same percentage of benefits that the federal government does, using federal taxable income thresholds of $25,000 (single) or $32,000 (married). If you fall below the threshold, no benefits are taxable in Kansas. Kansas has no age exemption.

Minnesota uses federal taxable income thresholds of $25,000 (single) or $32,000 (married) and taxes up to 85 percent of benefits. However, Minnesota allows a full exemption for people age 65 and older, so most retirees pay no state tax on benefits.

Missouri taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), but only for people under age 62. Once you turn 62, Missouri exempts all Social Security benefits from state tax.

Montana taxes benefits as ordinary income with no special threshold or exemption, meaning any resident with Social Security income may owe state tax depending on their total income and tax bracket. Montana has no age exemption.

Nebraska taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married). The percentage taxed matches the federal calculation. Nebraska also exempts all benefits for people age 67 and older.

New Mexico taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), taxing up to 50 percent of benefits. However, New Mexico exempts all benefits for people age 65 and older.

Rhode Island taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), taxing the same percentage as the federal government. Rhode Island also exempts all benefits for people age 59 and older.

Utah taxes benefits as ordinary income using federal taxable income thresholds of $25,000 (single) or $32,000 (married). The percentage taxed matches the federal calculation. Utah has no age exemption.

Vermont taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), taxing up to 50 percent of benefits. Vermont has no age exemption.

West Virginia taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), taxing up to 50 percent of benefits. West Virginia also exempts all benefits for people age 62 and older.

Illinois taxes benefits using federal taxable income thresholds of $25,000 (single) or $32,000 (married), but exempts all benefits for people age 62 and older.

Age-based exemptions reduce taxes for many retirees

Eight of the thirteen states that tax benefits — Connecticut, Minnesota, Missouri, Nebraska, New Mexico, Rhode Island, West Virginia, and Illinois — exempt all Social Security benefits for people who reach a certain age. The age threshold varies: Missouri and Illinois exempt at 62, Rhode Island at 59, West Virginia at 62, Connecticut at 62, Nebraska at 67, Minnesota at 65, and New Mexico at 65.

This means that even though a state technically taxes Social Security benefits, most people who receive them may pay nothing. If you are close to the age threshold in your state, your tax bill could drop to zero within a year or two without any change to your income.

The states without age exemptions — Colorado, Kansas, Montana, Utah, and Vermont — tax benefits for all ages once income thresholds are met. In these states, the only way to avoid tax on benefits is to keep your total income below the threshold.

Income thresholds and combined income calculations

All thirteen states that tax benefits use the same federal income thresholds as a starting point: $25,000 for single filers and $32,000 for married couples filing jointly. However, the way they calculate your combined income varies slightly by state. Most states use your federal adjusted gross income or federal taxable income as the base, then add back your Social Security benefits to determine whether you cross the threshold.

Combined income includes wages, self-employment income, interest, dividends, pensions, rental income, and other sources — not just Social Security. If you have a pension and Social Security, both count toward the threshold. If you have investment income and Social Security, both count. This is why two people with identical Social Security checks can have very different tax bills: the person with a pension or other income may owe tax, while the person with only Social Security may not.

Some states allow deductions or adjustments that reduce your combined income for tax purposes. For example, if you contribute to a traditional IRA, that contribution may reduce your adjusted gross income in some states. Check your state's tax form or instructions to see whether any deductions explore to your situation.

How to find your state's current rules

State tax laws change, and some states have modified their rules in recent years. The most reliable source for your state's current Social Security tax treatment is your state's department of revenue or taxation website. Search for "[your state] Social Security tax" to find the official page.

Your state tax form or instructions will also explain how to report Social Security benefits. If you file a state return, the form will show you which line to use and whether any exemptions explore to you. Many states provide worksheets to help you calculate whether your benefits are taxable.

If you live in a state that taxes benefits and your income is close to the threshold, it may be worth consulting a tax preparer or accountant who knows your state's rules. The difference between owing tax and owing nothing can be a few hundred dollars, and some strategies — like timing retirement income or managing other sources of income — may reduce your bill.

Frequently Asked Questions

Do I have to pay federal tax and state tax on the same benefits?

Not necessarily. You might owe federal tax on your benefits but no state tax if you live in a state that does not tax them, or vice versa. The federal government and your state use different income thresholds and formulas, so your federal and state tax bills are calculated separately.

If I move to a state that does not tax Social Security, do I get a refund?

No. You owe tax to the state where you lived when you earned the income. If you move to a state that does not tax benefits, you will not owe tax on benefits going forward, but you do not receive a refund for taxes paid to your previous state. Check with your old state's tax authority about your final return.

What counts as income for the Social Security tax threshold?

The threshold is based on your combined income: Social Security benefits plus wages, self-employment income, interest, dividends, pensions, and other sources. The exact definition varies by state, but most use federal adjusted gross income or federal taxable income as the starting point. Your state tax form will specify which income counts.

Can I reduce my state tax on benefits by reducing other income?

Possibly. If your combined income is just above your state's threshold, reducing other income sources — for example, by delaying a pension payment or managing investment sales — might bring you below the threshold and eliminate state tax on benefits. This strategy works only in states that use income thresholds. Consult a tax professional to see whether it makes sense for your situation.

Does my spouse's income count toward the threshold if we file separately?

Yes, in most states that tax benefits. Even if you file separate returns, your spouse's income counts toward the combined income threshold. Some states have different rules for married couples filing separately, so check your state's instructions or contact your state tax authority.