These States Don't Tax Social Security Benefits
It's smart to find out how much of your Social Security benefits are likely to be taxed by the state you live in and by the federal government, as that information can help in your retirement planning. Here's a look at which states do -- and don't -- tax Social Security.
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These states (and one district) don't tax Social Security benefits
Here are the many non-taxers:
Alabama
Alaska
Arizona
Arkansas
California
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
Washington
Wisconsin
Washington, D.C.
Wyoming
10 states do tax Social Security
Here are the states that do tax Social Security benefits:
Colorado
Connecticut
Kansas
Minnesota
Montana
Nebraska
New Mexico
Rhode Island
Utah
Vermont
West Virginia
Note, though, that this list changes from year to year. West Virginia, for example, has passed legislation that will eliminate Social Security taxation within a few years.
Meanwhile, many states that do tax Social Security do so with a very light hand. Colorado, for example, does not tax Social Security benefits of those who are 65 or older. And in Minnesota, those meeting certain income requirements can subtract up to $5,840 on their tax return.
Don't forget Uncle Sam
Unfortunately, while your state may not tax your Social Security benefits much or at all, that's not necessarily true for the federal government. It actually may tax up to 85% of your benefits.
So rest assured that you probably won't face significant Social Security state taxes in retirement -- at least at the state level. And Uncle Sam may not tax your benefits, either. But take some time to think through the decision of when to claim your benefits, as there may be tax ramifications to consider.The $22,924 Social Security bonus most retirees completely overlook
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