37 States That Don’t Tax Social Security Benefits – Community News
Social Security

37 States That Don’t Tax Social Security Benefits

There are certain aspects of Social Security that overwhelm seniors. For starters, some recipients are surprised at the low income they receive from Social Security. Others, meanwhile, are often shocked to learn that Social Security benefits can be subject to taxes in many cases.

Whether your benefits are subject to federal taxes depends on what your total retirement income looks like. If Social Security is your only source of retirement income, you generally don’t have to pay taxes.

But federal taxes aren’t the only thing to worry about once you start collecting Social Security. Depending on where you retire, you may also be subject to state taxes on your benefits.

Map of the United States

Image source: Getty Images.

Most states don’t tax Social Security

The good news is that right now there are only 13 states that levy their own taxes on Social Security benefits:

  1. Colorado
  2. Connecticut
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Nebraska
  8. New Mexico
  9. North Dakota
  10. Rhode Island
  11. Utah
  12. Vermont
  13. West Virginia

This means that in these 37 states those taxes don’t apply:

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Delaware
  7. Florida
  8. Georgia
  9. Hawaii
  10. Idaho
  11. Illinois
  12. Indiana
  13. Iowa
  14. Kentucky
  15. Louisiana
  16. Maine
  17. Maryland
  18. Massachusetts
  19. Michigan
  20. Mississippi
  21. Nevada
  22. New Hampshire
  23. New Jersey
  24. New York
  25. North Carolina
  26. Ohio
  27. Oklahoma
  28. Oregon
  29. Pennsylvania
  30. south carolina
  31. south dakota
  32. Tennessee
  33. Texas
  34. Virginia
  35. Washington
  36. Wisconsin
  37. Wyoming

Another thing worth noting is that next year West Virginia will stop taxing benefits for residents who earn less than a set amount.

Should You Retire to a State That Has No Tax Benefits?

Avoiding taxes on your Social Security income can be important to you, especially if you expect these benefits to be your primary income stream. But before you make a point of avoiding those 13 (soon to be 12) states that offer tax breaks, there are other factors worth looking at.

For example, look at the cost of living of each state. You may find that while some states offer tax breaks, they also offer much cheaper housing and lower cost of living. And those factors can work more for your financial benefit when you retire than a lack of taxes.

Another thing to consider is that most states that offer tax breaks offer some type of exemption for lower income earners. This means that if Social Security is your primary or only source of income, your benefits may not actually be taxed after all, even if a state tax exists.

Do your research

Taxes on Social Security benefits are not something that should surprise you. It pays to read how Social Security works to make sure you understand the ins and outs of your benefits.

By the way, it’s easy enough to estimate your monthly benefit well in advance of retirement so that you know what to expect. All you need to do is create an account on the Social Security Administration’s website and access your annual earnings statements, which summarize your annual salary and give you a preview of your future benefits.

Editor’s Note: This article has been corrected to note that the West Virginia exception does not apply to all residents.