Massachusetts does not tax Social Security benefits

If you receive Social Security retirement, survivor, or disability benefits and live in Massachusetts, the state does not tax those payments. This applies whether you receive benefits as a retiree, a surviving spouse or child, or a person with a disability. Massachusetts is one of the states that excludes Social Security income entirely from state taxation.

Federal tax rules are separate. The federal government may tax part of your Social Security depending on your total income, but that is a federal matter, not a Massachusetts one. This guide covers only what Massachusetts taxes.

Key Takeaways

  • Massachusetts does not tax Social Security retirement, survivor, or disability benefits under state law.
  • Federal tax rules may still apply to your benefits depending on your other income, but that is separate from Massachusetts state tax.
  • You do not need to report Social Security income on your Massachusetts tax return.
  • If you also receive other retirement income like a pension or IRA withdrawal, Massachusetts may tax those, but not the Social Security portion.

What counts as Social Security income in Massachusetts

Social Security income includes monthly retirement benefits, survivor benefits paid to family members after a worker's death, and Supplemental Security Income (SSI) for people with disabilities. It also includes any lump-sum payments you receive from Social Security, though these are rare.

The exemption applies to the full amount you receive from Social Security Administration. If you receive $2,000 per month, none of that $2,000 is subject to Massachusetts state income tax. This is different from some other states that tax Social Security partially or in full.

Other retirement income that Massachusetts does tax

While Social Security is exempt, Massachusetts does tax other forms of retirement and income. If you receive a pension from a former employer, distributions from an IRA or 401(k), or earnings from work, those are subject to Massachusetts income tax at the state's standard rate.

Massachusetts also taxes interest, dividends, and capital gains. If you have a mix of income sources—Social Security plus a pension, for example—only the Social Security portion is exempt. You would still owe tax on the pension income.

How to report Social Security on your Massachusetts return

You do not report Social Security income on your Massachusetts state tax return. When you file Form 1, the Massachusetts individual income tax return, you list only income that is taxable under state law. Social Security does not appear on that form.

You will still receive a Social Security Benefit Statement (Form SSA-1099) from Social Security Administration each January, which shows what you received in the prior year. Keep this for your records, but you do not need to attach it to your Massachusetts return. If you file a federal return, you may need to report Social Security there depending on your total income, but that is a separate process.

When you have both Social Security and other income

If you receive Social Security and also have income from a job, pension, or investments, you file one Massachusetts return that includes all your taxable income. The state will tax the non-Social Security portions at the standard Massachusetts income tax rate, which is 5.0 percent on most income.

Some types of income have different tax rates in Massachusetts. Long-term capital gains and certain dividends are taxed at 5.0 percent. Interest and short-term capital gains are taxed at 5.0 percent. Wages and salary are taxed at 5.0 percent. Social Security remains exempt regardless of what else you earn.

If you move to or from Massachusetts

If you move out of Massachusetts, you stop owing Massachusetts state tax on any income, including Social Security. If you move into Massachusetts from another state, you begin owing Massachusetts tax on taxable income starting the day you become a resident, but Social Security remains exempt.

Residency for tax purposes is determined by where you live on December 31 of the tax year. If you split time between Massachusetts and another state, you may owe tax to both states on income earned while you were a resident of each. Contact the Massachusetts Department of Revenue if you are unsure whether you are considered a resident for a particular year.

Frequently Asked Questions

Do I have to file a Massachusetts tax return if I only receive Social Security?

No. If Social Security is your only income and you have no other taxable income, you do not have to file a Massachusetts return. Massachusetts has no filing requirement for people with no taxable income. If you have other income like a pension or wages, you may need to file even if your Social Security is exempt.

Will my Social Security be taxed if I go back to work?

Your Social Security itself will not be taxed by Massachusetts, but your work income will be. If you earn wages or self-employment income, Massachusetts taxes that at 5.0 percent. The federal government may also tax part of your Social Security if your total income is high enough, but that is a federal rule, not a Massachusetts one.

What if I receive both Social Security and a pension?

Massachusetts taxes the pension but not the Social Security. If you receive a $1,500 pension and $1,500 in Social Security, only the $1,500 pension is subject to state tax. You report the pension on your Massachusetts return and leave Social Security off.

Do I need to report my Social Security to the state when I start receiving it?

No. Social Security Administration handles your benefits. You do not need to notify Massachusetts that you are receiving Social Security. Massachusetts will not tax it, and you do not report it on your state return.