The federal government taxes Social Security benefits. Generally, only very low-income taxpayers escape the Social Security tax altogether. Depending on other substantial sources of income, up to 85% of Social Security benefits may ultimately be taxable.

At the state level, policies vary: 41 states and the District of Columbia do not tax Social Security benefits, while nine states do. Rates vary by state, as do the exclusions and income limits. Here's what you should know.

Nine states tax some or all of their residents' Social Security benefits. These states are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.

Federal Taxes on Social Security Benefits

澳洲幸运5官方开奖结果体彩网:Social Security payments have been subject to taxation by the federal government since 1983. The percentage of Social Security income that is taxed varies depending on the person's filing status and "combined income," which is defined as total 澳洲幸运5官方开奖结果体彩网:adjusted gross income (AGI), nontaxable inte🎶rest, and half of the person's Sꦯocial Security income.

Regardless of the result of the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) cౠalculation, the ꦺamount subject to taxes won’t exceed 85% of the total benefit.

Spousal Social Security benefits and Social Security disability benefits follow the same basic rules as the primary Social Security program. The amount subject to federal income taxes (up to 85%) is dependent on the retiree’s total income. 澳洲幸运5官方开奖结果体彩网:Supplemental Security Income (SSI), which is paid primarily to low-income disabled adults and children, is not taxed.

Can Federal Social Security Tax Be Avoided?

If you're wondering if there’s anywhere in the U.S. where Social Security benefits won’t be taxed at all—by the federal government or the state—the answer is no. This place doesn't exist.

The only way to avoid paying taxes on Social Security income is by remaining below the minimum taxable income threshold. Individuals with a combined income of more than $25,000 and couples with a combined income of more than $32,000 are required to pay some taxes on a portion of their Social Security income. That portion tops off at 85%.

It's possible to at least decrease—if not eliminate—the taxes due on Social Security income with plenty of advance planning. For example, saving for retirement in a 澳洲幸运5官方开奖结果体彩网:Roth 401(k) or Roth IRA account yields withdrawals that are tax-free. A 澳洲幸﷽运5官方开奖结果体彩网:qualified longevity annuity contract (🌄QLAC) is another option.

Out of all 50 states in the U.S., 41 states and the District of Columbia do not levy any tax on Social Security benefits. Nine of those states don't collect state income tax at all. They are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington State, and Wyoming.

Below is a list of the nine states that levy a tax on Social ♏Security ben🌳efits, with details on each state’s policy.

• Colorado: Colorado taxes Social Security benefits only on recipients under age 65. In 2024, beneficiaries between the ages of 55 and 64 can deduct up to $20,000 of Social Security benefits, while those aged 65 and older can deduct $24,000. Beginning in 2025, beneficiaries of all ages with an AGI of $75,000 (single filer) or $95,000 (joint filer) will be fully exempt. The income tax rate is a flat 4.4%.
• Connecticut: Connecticut’s Social Security income tax rate ranges from 3% to 6.99%. Depending on AGI and filing status, retirees are able to deduct most or all of their benefit income. Specifically, beneficiaries pay no state taxes on their benefits if their AGI is less than $75,000 (for a single filer or head of household) or $100,000 (for a married couple filing jointly.) Above these thresholds, 75% of Social Security income is still tax-exempt.
• Minnesota: Minnesota uses the same thresholds as the federal government for determining how much of a retiree’s Social Security benefits should be taxed. Additionally, those who do owe taxes on their benefits can take advantage of Minnesota’s Social Security Subtraction to secure a partial deduction. Minnesota’s Social Security income tax ranges from 5.35% to 9.85%.
• Montana: Montana's graduated income tax rates range from 4.7% to 5.9%. As with the federal tax, retirees with an AGI of less than $20,500 (single filer) or $41,000 (married filing jointly) are not subject to tax on their Social Security benefits. This is not the case for residents in higher income brackets. Montana uses a different method than the federal government to calculate the amount someone owes (the state tax form provides a worksheet). 
• New Mexico: New Mexico taxes personal income at a rate of 1.7% to 5.9%. However, most Social Security recipients will never have to pay state taxes on their benefits. Beginning in tax year 2022, single filers who earn less than $100,000 and joint filers who earn less than $150,000 will be exempt from state taxes on Social Security benefits. 
• Rhode Island: As with New Mexico, Rhode Island taxes Social Security income only if filers have a combined income that exceeds certain limits. Rhode Island taxes personal income at a rate of 3.75% to 5.99%. However, the state doesn't tax the benefits of retirees who earn an AGI of less than $101,000 (single filer) or $126,250 (married filing jointly).
• Utah: With a flat individual tax rate of 4.55%, Utah, like Minnesota, uses the same formula as the federal government for determining how much of a retiree’s Social Security benefits ought to be taxed. However, Utah offers a partial or full credit on taxable benefits. Single filers and couples filing jointly with AGIs of less than $45,000 and $75,000, respectively, are eligible for a full tax credit on their benefit income. Those in a higher income bracket still get a partial tax break, with the credit decreasing by 25 cents for each dollar above the income limits.
• Vermont: In Vermont, single filers with an AGI of up to $50,000 are eligible for a full exemption from state taxation of their Social Security benefits, while those who make $50,001 to $59,999 qualify for a partial exemption. For couples filing jointly, the full exemption applies for those with an AGI of up to $65,000 and is phased out for those with incomes ranging from $65,001 to $74,999. For single filers and couples filing jointly earning at least $45,400 and $75,000, respectively, benefits are fully taxed at the state rate of 3.35% to 8.75%.
• West Virginia: West Virginians who collect Social Security benefits can subtract 35% of their benefits from their state taxable income. For 2025, that deduction increases to 65%. For 2026 and beyond, West Virginians can deduct the entirety of their Social Security benefits.

Taxes on Other Retirement Income

Income from other retirement programs may also be subject to federal income taxes. Pension payments, for example, are fully taxable or partially taxable, depending on how much in 澳洲幸运5官方开奖结果体彩网:after-tax dollars the individual or the employer invested in the contract.

At the state level, policies vary depending on the source of one's 澳洲幸运5官方开奖结果体彩网:retirement income. In addition to the above-mentioned states that don't have any income tax, six exclude 澳洲幸运5官方开奖结果体彩网:pension income from taxation: Alabama, Hawaii, Illinois, Iowa, Mississippi, and Pennsylvania. When it comes to retirement 澳洲幸运5官方开奖结果体彩网:distributions, four states exclude them from taxation: Illinois, Iowa, Mississippi, and Pennsylvania.

Are States That 💝Tax Social Security Benefits Wo🌱rse for Retirees?

Including Social Security benefits in taxable income doesn’t necessarily make a state a more expensive 澳洲幸运5官方开奖结果体彩网:place to retire.

According to the Missouri Economic Research and Information Center, as of the second quarter of 2024, while three of the states that tax Social Security benefits have notably high 澳洲幸运5官方开奖结果体彩网:cost-of-living index scores, the remaining six fell within the two lowest-scoring groups.

Cost of Living in States With Social Securit🌊y Taxes

The inverse is also true, as states that don’t levy a Social Security tax aren’t inherently less expensive or even tax-friendlier places to live. When a state government doesn’t garner income from one potentially t🌼axable source, it ty🐽pically makes up for it with other forms of taxation.

For instance, while Texas doesn’t have a state income tax (thereby precluding a Social Security income tax), it relies heavily on taxes from a variety of other sources. These include insurance taxes, 澳洲幸运5官方开奖结果体彩网:sin taxes on some beverages, tobacco products, and slot machines, and gasoline taxes.

Other states that don’t earn revenue from Social Security income—such as Arkansas, California, Louisiana, and New York—have some of the highest income or sales tax rates in the U.S.

What might be an affordable place to live for one person may𒁏 not be for someone else with different requirements, interests, and circumstances.

The Bottom Line

State taxes on Social Security, or the absence of them, shouldn’🥀t be the sole motivating factor when deciding on a long-term retirement r𒆙esidence.

In any case, consider the individual state's policy. It may omit lower incomes from the tax, tax only part of the Social Security income, or both. Moreover, check out the state's other taxes. A state that doesn't tax one source often taxes another.

Be sure to research other comparative costs in various locations you're considering, such as housing and healthcare prices. And don't forget about all of the other quality-of-life considerations that go into choosing a retirement home, such as weather, community services, cultural attractions, and healthcare quality.