List of all 50 states that do and don’t tax social security benefits including dependent, survivor, SSI and SSDI benefits. The federal government does tax up to 85% of social security benefits depending on your income but 38 states tax exempt social security income. Keep in mind this list doesn’t necessarily mean these states are the most tax friendly or best states to retire as some states still have other state income taxes, sales tax or 401k or pension taxes plus there are states with high property taxes.
Find out if if there will be a Social Security increase next year with the COLA increase watch.
37 States That Don’t Tax Social Security Benefits Plus Washington D.C.
The following states don’t tax social security benefits. Some states do tax state income tax but don’t tax social security and others simply do not collect any state income tax:
- Alabama
- Alaska (no state income tax)
- Arizona
- Arkansas
- California
- Delaware
- Florida (no state income tax)
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Nevada (no state income tax)
- New Hampshire (no state income tax, dividend and interest taxes only)
- New Jersey
- New York
- North Carolina
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota (no state income tax)
- Tennessee (no state income tax, dividend and interest taxes only)
- Texas (no state income tax)
- Virginia
- Washington (no state income tax)
- Wisconsin
- Wyoming (no state income tax)
- Washington D.C.
13 States That Do Tax Social Security Benefits or Partially
Some states reduce the level of taxation applied to Social Security benefits depending on things like age or income level:
- Colorado (excludes any taxpayer with an adjusted gross income (AGI) less than $75,000 (single filers) or $100,000 (filing jointly))
- Connecticut
- Kansas (excludes any taxpayer with an AGI less than $75,000 regardless of filing status)
- Minnesota (starts with a graduated system with income below $81,180 (single filer) or $103,930 (filing jointly))
- Missouri (allows a 100% exemption as long as the taxpayer is 62 or older and has less than an AGI of $85,000 (single filer) or $100,000 (filing jointly) in annual income)
- Montana (starts with a graduated system with income below $36,420 (single filer); Once income exceeds $36,420, 85 percent of Social Security benefits will be taxed)
- Nebraska
- New Mexico (low-income taxpayers 65 and older may exempt up to $8,000 of income and gradually phases out at $28,500 (single filer) or $51,000 (filing jointly. All income is exempt for taxpayers who are 100 or older)
- North Dakota (taxpayers can deduct taxable Social Security benefits if their AGI is less than $50,000 (single filer) or $100,000 (filing jointly))
- Rhode Island (taxpayers receive a modification who have reached full retirement age as defined by the SSA and have a federal AGI of under $81,900 (single filer) or $102,400 (filing jointly))
- Vermont (starts with a graduated system with income below $34,000 (single filer) or $44,000 (filing jointly))
- West Virginia (starts with a graduated system with income below $50,000 (single filer) or $100,000 (filing jointly) the tax will be eliminated by 65 percent; effective 2021 there will be no social security tax for those that meet the minimum income levels)
Note: These lists are not an indicator of being the most tax-friendly states as there are other factors to consider such as property taxes and how pension withdrawals are taxed.
States Where Pensions Aren’t Taxed
Alaska , Florida , Illinois , Mississippi , Nevada , New Hampshire , Pennsylvania , South Dakota , Tennessee , Texas , Washington, and Wyoming.
Limited Taxes on Pensions: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, South Carolina, Utah, Virginia, and Wisconsin.
For the above states you may be eligible for disability-related income (SSDI, SSI) deductions or credits. Federally Adjusted Gross Income (AGI) may also exempt some or all of a recipients taxable portion.
If you live in a U.S. territory (American Samoa, Guam, Northern Marianas Islands, Puerto Rico, U.S. Virgin Islands) or possession and receive Social Security benefits, your benefits may be taxable. (in addition to any U.S. federal income tax liability.)
These States Don’t Tax Social Security & Don’t Tax Military Retirement Pay
- Alabama (no state income tax)
- Alaska
- Arkansas
- Florida (no state income tax)
- Hawaii
- Illinois
- Iowa
- Louisiana
- Maine
- Massachusetts
- Michigan
- Mississippi
- Nevada (no state income tax)
- New Hampshire (no state income tax, dividend and interest taxes only)
- New Jersey
- New York
- Ohio
- Pennsylvania
- South Dakota (no state income tax)
- Tennessee (no state income tax, dividend and interest taxes only but will be phased out in 2021)
- Texas (no state income tax)
- Washington (no state income tax)
- Wisconsin
- Wyoming (no state income tax)
These States Don’t Tax Social Security but do tax a portion of military retirement pay or a have other special provisions
- Arizona
- Delaware
- Georgia
- Idaho
- Indiana
- Kentucky
- Maryland
- North Carolina
- Oklahoma
- Oregon
- South Carolina
- Washington D.C.
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