Which States Tax Social Security Benefits?
Only 13 states do, and one is phasing out the tax
Less than half of all states impose income taxes on Social Security benefits. In all, 37 states (plus the District of Columbia) don't, and 13 others tax only a portion.
Of the 13 states that do impose a tax, six follow the federal rules for determining the taxable portion of Social Security benefits. The remaining seven states have their own calculations for how much of a person's Social Security benefits are subject to tax. West Virginia, meanwhile, is phasing out the tax and plans to eliminate it in 2022.
Here's a state-by-state breakdown as of June 2020:
|State||DON'T Tax||DO Tax|
|District of Columbia||X|
|West Virginia||$$ (Phasing Out)|
States Where Social Security Is Taxed
The following 13 states tax Social Security benefits to varying degrees:
Colorado's pension subtraction system exempts up to $24,000 pension and annuity income, including some Social Security benefits, based on the age of taxpayers, and starting at age 55.
Connecticut partially or fully exempts Social Security benefits based on a person's filing status and income.
Kansas exempts Social Security benefits from state tax based on the taxpayer's income. If your federal adjusted gross income is $75,000 or less, regardless of your filing status, your Social Security benefits are exempt from Kansas income tax.
Minnesota partially taxes Social Security benefits. The state allows a subtraction from benefits ranging from $2,250 to $4,500 depending on filing status, but this rule is subject to phaseouts starting at incomes of $77,000 for joint married filers, $60,200 for head of household and single filers, and $38,500 if you're married and file a separate return.
Missouri exempts Social Security benefits from state tax as long as the person is age 62 or older and has adjusted gross income of $100,000 if married filing jointly, or $85,000 for all other filing statuses. Those who earn more than this might qualify for exemption if they're 62 or older or disabled.
Montana provides a worksheet to determine what portion of your Social Security benefits is taxable by the state, and this may be different from the federal amount.
Nebraska allows a deduction for Social Security income included in federal adjusted gross income (AGI) if a taxpayer’s federal AGI is less than or equal to $58,000 for married couples filing jointly, or $43,000 for all other tax returns.
Given the current state of fiscal disruption in 2020, don't be surprised if some states re-evaluate their entire taxing structure in the coming year.
New Mexico follows the federal rules for including a portion of Social Security benefits as part of taxable income. The state provides a tax credit to offset the tax on Social Security benefits. This credit is calculated on Form PIT-RC.
North Dakota in 2019 made significant changes to its taxation policy for Social Security income. Federally taxable Social Security benefits are now tax-exempt in the state for incomes up to $50,000 for single filers and $100,000 for married filers.
Rhode Island has an exemption on Social Security taxation for those who have reached full retirement age and in tax year 2018 had an adjusted gross income of up to $83,550 for an individual and $104,450 for a married couple. The limits increase for inflation annually.
In late 2019, Utah adopted a sweeping new tax bill that includes a Social Security tax credit.
Vermont followed the federal rules for determining the taxable portion of Social Security benefits, then it adopted exemptions for taxpayers with incomes below $25,000 for single filers and $32,000 for other statuses. Benefits for those with higher incomes are taxed at incremental levels with no exemption after $55,000 or $70,000 respectively.
West Virginia follows the federal rules for determining the taxable portion of Social Security benefits. Legislation passed in 2019 will eliminate state taxes on these benefits by 2022.
Before You Move to a Taxable State
If you are considering retiring to one of the states that imposes a tax on Social Security benefits, you could end up ahead anyway if all other taxes are favorable—such as sales tax, gasoline tax, property tax, etc. Even if you live in a state with no state-imposed tax on Social Security benefits, you still remain subject to federal taxation if your income surpasses the designated limits.
Colorado Department of Revenue. "Retirement Pension or Annuity Subtraction." Accessed Feb. 18, 2020.
State of Connecticut Department of Revenue Services. "Taxability of Social Security Benefits for Connecticut Income Tax Purposes," Page 1. Accessed Feb. 18, 2020.
Kansas Department of Revenue. "Frequently Asked Questions About Individual Income." Accessed Feb. 18, 2020.
Minnesota House Research Department. "Taxation of Social Security Benefits." Accessed Feb. 18, 2020.
Missouri Department of Revenue. "Am I Eligible?" Accessed Feb. 18, 2020.
Montana Department of Revenue. "Retirements, Annuities, and Pensions," Download Form 2, Page 5. Accessed Feb. 18, 2020.
Nebraska Department of Revenue. "2019 Nebraska Individual Income Tax Booklet," Page 16. Accessed Feb. 18, 2020.
New Mexico Taxation and Revenue Department. "Personal Income Tax Credits." Accessed Feb. 18, 2020.
North Dakota Office of State Tax. "2019 North Dakota Individual Income Tax," Page 2. Accessed Feb. 18, 2020.
Wolters Kluwer. "Rhode Island Announces 2019 Personal Income Rate Schedules, Deductions, Exemptions." Accessed Feb. 18, 2020.
Utah State Legislature. "SB2001, Tax Restructuring Revisions." Accessed Feb. 18, 2020.
Vermont Department of Taxes. "Social Security Exemption Overview." Accessed Feb. 18, 2020.
West Virginia Legislature. "Committee Substitute for House Bill 2001," Page 4. Accessed Feb. 18, 2020.