How Social Security taxation works by state
Thirty-seven states do not tax Social Security benefits at all. Thirteen states tax some or all of your Social Security income, but most of those states have income thresholds or exemptions that protect lower-income retirees. The states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Illinois taxes Social Security but only for people over 61 who receive it before their full retirement age.
Whether you owe state tax on your benefits depends on two things: which state you live in and how much total income you have. A state that taxes Social Security usually exempts people whose combined income falls below a certain level. Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits — the same calculation the federal government uses. If you live in a state that taxes Social Security and your combined income is below the threshold, you will not owe state tax on those benefits even though you live there.
Key Takeaways
- Thirteen states tax Social Security benefits, but most of them exempt retirees whose combined income is below a set threshold.
- Combined income for tax purposes includes your adjusted gross income, nontaxable interest, and half your Social Security benefits.
- If you move to a state that does not tax Social Security, you may stop owing state tax on those benefits starting the year you move.
- Your state tax return will show whether you owe tax on Social Security; the Social Security Administration does not handle state tax withholding.
States that tax Social Security and their income limits
Colorado exempts residents whose combined income is under $24,000 (single) or $32,000 (married filing jointly). Connecticut taxes Social Security for residents whose combined income exceeds $75,000 (single) or $100,000 (married). Kansas taxes Social Security the same way the federal government does — only if your combined income is above $25,000 (single) or $32,000 (married), and only the amount above that threshold is taxable.
Minnesota taxes Social Security for residents whose combined income exceeds $68,025 (single) or $114,375 (married). Missouri exempts the first $6,000 of Social Security income per person. Montana taxes Social Security like the federal government does, with the same $25,000 and $32,000 thresholds. Nebraska taxes Social Security for residents whose combined income exceeds $32,000 (single) or $50,000 (married). New Mexico exempts residents age 65 and older from Social Security tax entirely. Rhode Island taxes Social Security for residents whose combined income exceeds $80,000 (single) or $100,000 (married). Utah taxes Social Security the same way the federal government does. Vermont taxes Social Security for residents whose combined income exceeds $74,250 (single) or $93,750 (married). West Virginia taxes Social Security for residents whose combined income exceeds $55,000 (single) or $70,000 (married).
These thresholds and exemption amounts change year to year in some states. Check your state's Department of Revenue website or your state tax form instructions for the current year's numbers before you file.
How to learn about you owe state tax on Social Security
The easiest way is to look at your state income tax form instructions for the year you are filing. Most state tax forms have a worksheet that walks you through the calculation. You will need your Social Security statement (which shows how much you received that year), your adjusted gross income from your federal return, and any nontaxable interest you earned.
If you use tax software, the program will ask you about your Social Security income and calculate whether you owe state tax. If you file with a tax preparer, bring your Social Security statement and let them know which state you live in — they will handle the calculation. You can also call your state's Department of Revenue and ask whether you owe tax based on your income and filing status, though you will need to have your numbers ready.
What happens if you move to a different state
If you move from a state that taxes Social Security to one that does not, you will not owe state tax on your Social Security benefits starting the year you move, as long as you are a resident of the new state for the full tax year. You may still owe tax to your old state for the part of the year you lived there, depending on how that state handles part-year residents. Check the tax form instructions for both states to see whether you need to file in each one.
If you move from a state that does not tax Social Security to one that does, you will begin owing state tax on your benefits starting the year you move — but only if your combined income is above that state's threshold. Moving mid-year does not change your tax status for that year; you file based on where you lived on December 31.
Federal taxation of Social Security versus state taxation
The federal government and individual states use the same combined income thresholds to decide whether to tax Social Security, but they tax different amounts. The federal government taxes up to 85 percent of your benefits if your combined income is high enough. States that tax Social Security use different rules — some tax the same percentage the federal government does, some tax a flat percentage, and some exempt certain amounts or age groups entirely.
Your federal tax return and your state tax return are separate. If you owe federal tax on Social Security, you may not owe state tax, or you may owe a different amount. The Social Security Administration does not withhold state income tax from your benefits; you handle state tax through your state tax return, just like you do with federal tax.
How to request state tax withholding from Social Security
If you know you will owe state income tax on your Social Security benefits, you can ask the Social Security Administration to withhold money from your monthly payment. You do this by filling out Form W-4V (Voluntary Withholding Request) and sending it to your local Social Security office or the address on the form.
On the form, you choose a withholding rate: 7 percent, 10 percent, 12 percent, or 22 percent of your monthly benefit. The Social Security Administration will withhold that percentage every month and send it to your state tax authority. This is optional — you can also pay your state taxes through quarterly estimated tax payments or wait and pay when you file your return. Withholding from your benefit is just one way to handle it.
Frequently Asked Questions
Do I have to pay federal tax and state tax on the same Social Security income?
Not necessarily. You might owe federal tax on your benefits but no state tax, or vice versa. Each government uses the same combined income thresholds but taxes different amounts. Calculate each one separately on your federal and state returns.
What if I live in one state but worked in another — which state taxes my Social Security?
The state where you live on December 31 of the tax year is the one that can tax your Social Security. Your work history or where you earned income does not matter for Social Security taxation purposes.
Can I avoid state tax on Social Security by moving?
If you move to a state that does not tax Social Security, you will not owe state tax on those benefits starting the year you move. However, you may owe tax to your old state for the part of the year you lived there. Check both states' rules for part-year residents.
If I have Social Security withheld for state taxes, will that cover what I owe?
It might, or you might owe more or less when you file. Withholding is an estimate based on the percentage you choose. When you file your state return, you will see the exact amount you owe and get credit for what was withheld. If you withheld too much, you get a refund; if too little, you owe the difference.
Does my spouse's Social Security affect whether I owe state tax?
Yes. If you file jointly, your combined income includes both your Social Security and your spouse's Social Security, plus both of your other income. If you file separately, each person's combined income is calculated individually, and you each may owe different amounts of state tax.