Thirteen states tax Social Security income, but most do not

Thirty-seven states do not tax Social Security benefits at all. Thirteen states do tax some or all of your benefits, depending on your total income and filing status. 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 benefits under certain conditions.

Whether you owe state tax on your benefits depends on your combined income — not just what you receive from Social Security. Combined income includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. Each state that taxes benefits sets its own income threshold. If your combined income falls below that threshold, you pay nothing. If it exceeds the threshold, you may owe tax on a portion of your benefits.

Key Takeaways

  • Thirteen states tax Social Security: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, and Illinois (under certain conditions).
  • Whether you owe tax depends on your combined income — your adjusted gross income plus nontaxable interest plus half your Social Security benefits — not on your benefits alone.
  • Each state sets its own income threshold; if you fall below it, your benefits are not taxed in that state.
  • You may owe tax to one state while owing nothing to another, depending on where you live and your income level.

How each state calculates the tax

Colorado, Kansas, and Missouri do not tax Social Security benefits for residents age 55 and older. If you are younger than 55 and live in one of these states, your benefits may be taxable. Connecticut, Minnesota, Utah, and Vermont tax benefits based on your combined income and filing status, similar to federal rules but with different thresholds. Nebraska and New Mexico tax benefits as ordinary income once you exceed their income limits.

Montana taxes benefits for residents with combined income above $25,000 (single filers) or $32,000 (married filing jointly). Rhode Island taxes benefits for residents with combined income above $25,000 (single) or $32,000 (married filing jointly). West Virginia taxes benefits for residents with combined income above $25,000 (single) or $32,000 (married filing jointly). Illinois taxes benefits only if your total income from all sources, including Social Security, exceeds $75,000 for single filers or $100,000 for married couples filing jointly.

The amount of tax you owe varies by state. Some states tax up to 85 percent of your benefits once you cross the threshold; others tax a smaller percentage. Your state tax return will show the calculation. If you live in a state that taxes benefits and you receive a large lump sum of back benefits in a single year, your combined income may spike enough to trigger taxation that year even if you would not owe tax in normal years.

What combined income means and how to calculate it

Combined income is not the same as your Social Security benefit amount. It is the sum of three things: your adjusted gross income (wages, pensions, interest, dividends, and other income reported on your federal return), plus any nontaxable interest you earned (usually from municipal bonds), plus half of your Social Security benefits for the year.

Example: You receive $20,000 in Social Security benefits and have $15,000 in pension income. Your combined income is $15,000 + (half of $20,000) = $25,000. If you live in Montana, Rhode Island, or West Virginia, you are right at the threshold and may owe tax. If you live in Colorado, Kansas, or Missouri and are over 55, you owe nothing.

To find your combined income, start with your federal tax return. Add back any nontaxable interest. Then add half your Social Security benefits. The result is what each state uses to determine whether you cross their threshold. You do not need to file a separate calculation — your state tax return will walk you through it.

States with no Social Security tax and how to verify your state

If you live in Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, or Wyoming, your state does not tax Social Security benefits. You may still owe federal income tax on your benefits, but your state will not.

To confirm your state's rules, visit your state's department of revenue website and search for "Social Security tax" or "retirement income." Most states publish a tax guide for retirees that lists which income sources are taxed. You can also call your state's tax helpline — the number is usually on your state income tax form.

What to do if you live in a state that taxes benefits

If you live in one of the thirteen states that tax Social Security, you will report your benefits on your state income tax return. Most states use a worksheet similar to the federal worksheet to calculate how much of your benefits are taxable. You will need your Social Security statement (Form SSA-1099 or SSA-1042S) and your other income documents.

Some people in taxing states can reduce their state tax by timing income or managing other income sources. For example, if you are close to a state's income threshold, deferring a pension payment or delaying a large withdrawal from a retirement account to the next year might keep you below the threshold. This strategy works only if you have control over when you receive the income. Social Security benefits themselves cannot be deferred once you start receiving them.

If you move to a different state after you retire, your state tax situation may change. Some people move from a taxing state to a non-taxing state specifically to reduce their tax burden. If you are considering a move, calculate your state tax in both locations to see the difference. Keep in mind that moving also affects property tax, sales tax, and other state taxes, not just Social Security taxation.

Federal tax on Social Security and how it differs from state tax

The federal government taxes Social Security benefits using the same combined income calculation that states use, but with different thresholds. If your combined income exceeds $25,000 (single filers) or $32,000 (married filing jointly), you may owe federal tax on up to 85 percent of your benefits. This is separate from any state tax you owe.

You can reduce federal tax on your benefits by managing your combined income. Some people use tax-deferred accounts, charitable contributions, or other strategies to stay below the federal threshold. A tax professional who works with retirees can review your situation and suggest options specific to your income sources.

Frequently Asked Questions

Do I have to file a state tax return if I live in a state that taxes Social Security?

Not necessarily. If your only income is Social Security and you live in a state that taxes it, you may not have to file if your income is below the state's filing threshold. However, if you have other income (wages, pensions, interest), you likely must file. Check your state's tax guide or call the state revenue department to confirm the filing requirement for your situation.

What if I moved to a new state after I retired?

You owe state tax based on where you live on December 31 of the tax year. If you moved mid-year, you may owe tax to both your old state and your new state, though most states have rules to prevent double taxation. File a part-year return in your old state and a part-year return in your new state. Your new state's tax guide will explain how to report income earned before you moved.

Can I reduce the amount of my benefits that are taxed?

You cannot change how much Social Security you receive, but you can manage other income to stay below your state's threshold. Deferring pension payments, managing investment income, or timing large withdrawals may help. This works only if you have control over when you receive the income. Consult a tax professional to see whether these strategies apply to your situation.

If I receive a large back payment of Social Security, will I owe more state tax?

Possibly. A large lump sum in one year can push your combined income well above the threshold, triggering state tax that year. Some states allow you to spread the income over multiple years for tax purposes, but you must request this. Contact your state revenue department or a tax professional to ask whether your state offers this relief.

How do I know if I owe state tax on my benefits?

Use the worksheet in your state's tax guide or consult a tax professional. You will need your Social Security statement (Form SSA-1099), your other income documents, and your state's income thresholds. If your combined income is below the threshold, you owe nothing. If it is above, the worksheet will show you how much of your benefits are taxable.