Which States Tax Social Security Benefits and What You Need to Know
10 States Still Tax Social Security Benefits. Is Yours One of Them?
You don't want to claim benefits without understanding this. There's a lot to consider when deciding which state you'd like to retire in. You might be drawn to one because of its warm climate or the presence of family or friends. But you also have to take financial factors into account, like the cost of living and the tax-friendliness of that state.
These 10 states could tax your Social Security benefits
- Colorado
- Connecticut
- Kansas
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
If you live in one of these states, there's no reason to panic. Plenty of seniors live here and never pay a dime in state Social Security benefit taxes. Each state sets its own rules for determining which seniors owe these taxes and how much they pay.
The federal government taxes Social Security too
Most seniors won't have to worry about state Social Security benefit taxes regardless of where they live, but federal benefit taxes are much harder to avoid. The federal government uses provisional income to determine who owes these taxes. This is defined as your AGI, plus any nontaxable interest you have, and half your annual Social Security benefit.
...This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.