Thirteen states tax Social Security benefits, but most do not
Thirty-seven states do not tax Social Security income at all. Thirteen states do tax it, though most of those apply the tax only to people above a certain income threshold. The states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Illinois taxes Social Security but only for people over 61, and has been phasing out the tax since 2018.
Whether you owe state tax on your benefits depends on your state of residence and your total income in that year. The tax rate and income threshold vary by state. If you live in a state that taxes Social Security, you will need to report your benefits on your state tax return, though you may not owe tax if your income falls below the threshold.
Key Takeaways
- Thirteen states currently tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, and Illinois (limited to those under 61).
- Most states that tax Social Security only do so for people whose income exceeds a specific threshold, which ranges from about $25,000 to $75,000 depending on the state.
- Your "income" for Social Security tax purposes usually includes wages, pensions, interest, dividends, and half of your Social Security benefits, not just the benefits themselves.
- If you move to a different state after you start receiving benefits, your tax obligation changes based on your new state of residence.
How states calculate whether you owe tax on benefits
States that tax Social Security use a calculation called combined income to decide whether you cross the threshold. Combined income is not the same as your Social Security benefit amount. It is the sum of your adjusted gross income, tax-exempt interest, and half of your Social Security benefits.
For example, if you receive $20,000 in Social Security, earn $30,000 from a part-time job, and have $2,000 in tax-exempt interest, your combined income is $30,000 + $2,000 + ($20,000 × 0.5) = $42,000. Whether you owe tax depends on whether $42,000 exceeds your state's threshold.
The threshold varies significantly. Colorado taxes benefits if combined income exceeds $25,000 for single filers. Connecticut taxes benefits if combined income exceeds $75,000 for single filers. Nebraska taxes benefits if combined income exceeds $32,000 for single filers. Check your specific state's threshold before filing.
State-by-state tax rates and thresholds
| State | Threshold (Single Filer) | Tax Rate or Method |
|---|---|---|
| Colorado | $25,000 | Taxed as ordinary income (up to 4.63%) |
| Connecticut | $75,000 | Taxed as ordinary income (up to 6.99%) |
| Kansas | $75,000 | Taxed as ordinary income (up to 5.7%) |
| Minnesota | $68,025 | Taxed as ordinary income (up to 9.85%) |
| Missouri | $32,000 | Taxed as ordinary income (up to 5.3%) |
| Montana | $25,000 | Taxed as ordinary income (up to 6.9%) |
| Nebraska | $32,000 | Taxed as ordinary income (up to 6.84%) |
| New Mexico | $100,000 | Taxed as ordinary income (up to 5.9%) |
| Rhode Island | $80,000 | Taxed as ordinary income (up to 5.99%) |
| Utah | $25,000 | Taxed as ordinary income (up to 4.65%) |
| Vermont | $32,000 | Taxed as ordinary income (up to 8.75%) |
| West Virginia | $25,000 | Taxed as ordinary income (up to 6.5%) |
| Illinois | N/A (age-based) | Tax-free if age 61 or older; phasing out for younger recipients |
Tax rates shown are the top marginal rates in each state. Your actual rate depends on your total income and filing status. Thresholds for married filers are usually higher than for single filers — typically $32,000 to $100,000 depending on the state.
What happens if you move to a different state
Your state tax obligation is determined by where you live on December 31 of the tax year. If you move from a state that taxes Social Security to one that does not, you will not owe tax on your benefits starting in the year you establish residency in the new state.
If you move from a state that does not tax Social Security to one that does, you will begin owing tax on your benefits in the year you establish residency. Some people who are close to retirement use this fact to plan their move — establishing residency in a non-taxing state before they start receiving benefits can reduce their lifetime tax burden.
Residency is not the same as physical presence. You establish residency by obtaining a driver's license, registering to vote, buying property, or renting a home in the new state. If you spend winters in one state and summers in another, you are generally considered a resident of the state where you maintain your primary home and have the most significant connections.
How to report Social Security on your state tax return
If you live in a state that taxes Social Security, you will report your benefits on your state income tax return. Most states require you to report the full amount of benefits you received during the year, which you will find on your SSA-1099 form (Social Security Benefit Statement) sent by the Social Security Administration in January.
The state then applies its own rules to determine how much of your benefits are taxable. You do not calculate this yourself — the state's tax forms and instructions walk you through the calculation. If you use tax software or a tax preparer, they will handle this calculation for you.
If your income is below your state's threshold, you may not owe state tax even though you must report the benefits. Some states allow you to file a return just to claim a refund of taxes withheld, even if you do not owe tax overall.
Federal tax on Social Security is separate from state tax
The federal government also taxes Social Security benefits for some people, using a different set of rules and thresholds than the states. It is possible to owe federal tax on your benefits but no state tax, or vice versa. The two taxes are calculated independently.
If you are subject to federal tax on your benefits, the Social Security Administration can withhold federal income tax from your monthly payment. You can request this withholding using Form W-4V. State tax withholding is not available through Social Security, so if you owe state tax, you will need to pay it through your state's tax system or arrange withholding through an employer if you have other income.
Frequently Asked Questions
Do I have to pay state tax on Social Security if I am retired and have no other income?
It depends on your state and the amount of your benefits. If you live in a state that taxes Social Security and your combined income (including half your benefits) exceeds the threshold, you will owe tax even if Social Security is your only income source. If your combined income is below the threshold, you will not owe state tax.
Can I reduce my state tax by moving before I start receiving benefits?
Yes. If you establish residency in a state that does not tax Social Security before you start receiving benefits, you will not owe state tax on those benefits. However, moving solely for tax purposes may have other financial and personal costs, so consider the full picture before deciding.
What if I worked in one state but now live in another — which state taxes my benefits?
Your state of residence on December 31 of the tax year determines which state can tax your benefits. Where you worked or where you earned your Social Security credits does not matter for state tax purposes. Only your current state of residence applies.
Does my spouse's income affect whether I owe state tax on my benefits?
Yes, if you file a joint return. Combined income includes both spouses' income, so your spouse's wages, pensions, and other income count toward the threshold. If you file separately, only your own income counts, though filing separately may result in a higher tax rate.
If I have taxes withheld from my federal Social Security payment, does that cover state tax too?
No. Federal withholding and state withholding are separate. If you request federal withholding using Form W-4V, that money goes only to federal taxes. You will need to arrange state tax payment separately through your state's tax system or through withholding from other income if you have it.