Social Security benefits are one of the most impactful income sources for retirees. As of December 2024, over 51 million Americans received retired worker benefits, with many relying on them for a chunk or all of their retirement income.

Unfortunately, Social Security benefits are still considered income and may be subject to taxes. If you’re currently receiving or will be receiving Social Security retirement benefits soon, below is what you should know about which states may subject you to taxes and how Uncle Sam deals with it on the federal level.

Image source: Getty Images.

The states that do not tax Social Security benefits

Let’s start with the good news. Most states do not tax Social Security benefits. Below are the 41 states (and Washington, D.C.) that currently do not:

  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. Kansas
  15. Kentucky
  16. Louisiana
  17. Maine
  18. Maryland
  19. Massachusetts
  20. Michigan
  21. Mississippi
  22. Missouri
  23. Nebraska
  24. Nevada
  25. New Hampshire
  26. New Jersey
  27. New York
  28. North Carolina
  29. North Dakota
  30. Ohio
  31. Oklahoma
  32. Oregon
  33. Pennsylvania
  34. South Carolina
  35. South Dakota
  36. Tennessee
  37. Texas
  38. Virginia
  39. Washington
  40. Wisconsin
  41. Wyoming

This list hasn’t always been this long, as many states have recently eliminated their Social Security taxes. Take Missouri, Nebraska, and Kansas, for example, which all eliminated their taxes in 2024.

The states that do tax Social Security benefits

Unfortunately, 41 states and Washington, D.C. not taxing Social Security means there are nine states that do:

  • Colorado
  • Connecticut
  • Minnesota
  • Montana
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

There’s no way to predict if and for how long these states will continue to tax Social Security, but there is legislation in motion to do away with or noticeably reduce them in a couple of states.

For example, West Virginia enacted a law to begin phasing out the state income tax on Social Security over three years for individuals making under $50,000 and joint filers making under $100,000. For the 2024 tax year, 35% of Social Security benefits were exempt from the tax. This year, 65% of benefits are exempt, and beginning in 2026, all Social Security benefits will be exempt.

Federal tax rules apply to everyone, regardless of state

Taxes are generally divided into three levels: local, state, and federal. Unfortunately, even if your state doesn’t have a Social Security tax, you’re not off the hook regarding federal taxes on your benefits. The IRS uses your “combined income” to calculate your tax bill, and it includes the following:

  • Adjusted gross income (AGI): All your non-Social Security income.
  • Nontaxable interest: Interest income exempt from federal taxes, such as U.S. Treasury bonds.
  • Half of your Social Security benefits: 50% of your total Social Security benefits for the current year.

After calculating your combined income, Social Security uses the following ranges to decide how much of your benefits are eligible to be taxed.

Percentage of Taxable Benefits Added to Income Filing Single Married, Filing Jointly
0% Less than $25,000 Less than $32,000
Up to 50% $25,000 to $34,000 $32,000 to $44,000
Up to 85% More than $34,000 More than $44,000

Data source: Social Security Administration.

How federal taxes on Social Security works

The key wording with federal Social Security taxes is “eligible to be taxed.” The percentages in the above table aren’t how much your benefits will be taxed, just how much are eligible to be added to your other income and then taxed.

To see it in action, let’s assume: 1) you’re married, filing jointly; 2) you have a combined income of over $44,000; and 3) you receive $30,000 in annual Social Security benefits.

Your $30,000 in benefits won’t be taxed at 85%, but 85% of your benefits ($25,500) would be added to your other income and then taxed at your regular income tax rate.

If you’re in the 22% tax bracket, you’d owe $6,600 on the $30,000 you received in benefits that year versus owing $25,500 if your benefits were taxed at 85%. Needless to say, that’s a much better outcome.

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Hi, I’m Michael Erst, a finance writer dedicated to making money matters clear and accessible. I cover everything from investing and market trends to personal finance strategies and economic insights. My goal is to help you navigate the world of finance with confidence, whether you're managing your budget, exploring new investment opportunities, or keeping up with the latest financial news.

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