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:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin
- 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.
