Which States Exempt Social Security?

Social Security Benefits Are Not Taxed in 27 States and the District of Columbia

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Over half the states in the Union do not impose income taxes on Social Security benefits. Thirty-seven states plus the District of Columbia do not tax Social Security benefits at all. Thirteen other states tax a portion of Social Security benefits. In these 13 states, six states follow the federal rules for determining the taxable portion of Social Security benefits. The remaining seven states have set their own rules for determining how much of a person's Social Security benefits are subject to tax.

State

Social Security benefits

 

Not taxed at all

Partly taxed based on federal rules

Partly taxed based on Age or Income

Alabama

x

  

Alaska

x

  

Arizona

x

  

Arkansas

x

  

California

x

  

Colorado

  

x

Connecticut

  

x

Delaware

x

  

District of Columbia

x

  

Florida

x

  

Georgia

x

  

Hawaii

x

  

Idaho

x

  

Illinois

x

  

Indiana

x

  

Iowa

x

  

Kansas

  

x

Kentucky

x

  

Louisiana

x

  

Maine

x

  

Maryland

x

  

Massachusetts

x

  

Michigan

x

  

Minnesota

 

x

 

Mississippi

x

  

Missouri

  

x

Montana

  

x

Nebraska

 

x

 

Nevada

x

  

New Hampshire

x

  

New Jersey

x

  

New Mexico

  

x

New York

x

  

North Carolina

x

  

North Dakota

 

x

 

Ohio

x

  

Oklahoma

x

  

Oregon

x

  

Pennsylvania

x

  

Rhode Island

 

through the end of 2015

starting 2016

South Carolina

x

  

South Dakota

x

  

Tennessee

x

  

Texas

x

  

Utah

  

x

Vermont

 

x

 

Virginia

x

  

Washington

x

  

West Virginia

 

x

 

Wisconsin

x

  

Wyoming

x

  

 

States Where Social Security is Taxed

Colorado exempts pension and annuity income (including Social Security benefits) based on the age of the individual taxpayers.

If taxpayers have taxable Social Security benefits on their federal return, this federal taxable portion may qualify to be excluded from Colorado state tax under the Colorado pension subtraction. For details, see:

    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 a person'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.  The exemption for social security benefits applies only to the extent the benefits are included in your federal adjusted gross income" (Frequently Asked Questions about Individual Income: Retirement Contributions and Benefits, KSrevenue.org).

    Minnesota partially taxes Social Security benefits. 

    "Social Security income may be taxed on your federal return. Minnesota taxes the same amount that is taxed federally.

    If your only income is Social Security, you are not required to file an income tax return" (Seniors: Income Tax Fact Sheet 6, pdf, Revenue.state.MN.us, page 1).

    Pending in the Minnesota House of Representatives is a bill that would alter how Social Security benefits are taxed in the state (HF 3847; and Analysis of HF 3847 by Minnesota Revenue (pdf)).

    Missouri exempts the full amount of Social Security benefits from state tax as long as the person is age 62 or older.

    Montana -- "Your social security benefits taxable to Montana may be different from what is taxable federally. You will need to complete Worksheet VIII, Taxable Social Security Benefits, to determine your Montana taxable social security" (Frequently Asked Questions, Montana Department of Revenue).

    Nebraska "allows a deduction for Social Security income included in federal AGI if a taxpayer’s federal AGI [adjusted gross income] is less than or equal to $58,000 for married couples, filing jointly, or $43,000 for all other tax returns" (2015 Nebraska Individual Income Tax Booklet, pdf, page 2; see also page 16).

    New Mexico follows the federal rules for including a portion of Social Security benefits as part of taxable income. New Mexico provides a tax credit to offset the tax on Social Security benefits. This credit is calculated on Form PIT-RC (see the form and instructions for 2015).

    North Dakota follows the federal rules for including a portion of Social Security benefits as part of taxable income. North Dakota provides a marriage penalty credit for married persons who file jointly and who have North Dakota taxable income of more than $62,705. See page 16 of the 2015 Individual Income Tax Booklet (Form ND-1 Booklet, pdf).

    Rhode Island is changing how it taxes Social Security benefits. "Many of those who must pay federal income tax on their Social Security benefits will pay no Rhode Island income tax on those benefits for 2016 and later tax years," the Division of Taxation wrote in their summary of tax changes taking effect in 2016 (ADV 2015-23, pdf). In a separate document, the Division of Taxation details this change in how the state taxes Social Security benefits:

    "The computation of Rhode Island’s personal income tax begins with federal adjusted gross income (AGI). Modifications to federal AGI for Rhode Island purposes may result in an increase or decrease in federal AGI.

    "For tax years beginning on or after January 1, 2016, a modification will be allowed for certain beneficiaries of the federal Social Security program – for residents and nonresidents. You are eligible if:

    ▪ You (or your spouse, if married and filing jointly) receive any of the following types of Social Security benefits: old-age benefits (sometimes called retirement benefits); wife’s benefits; husband’s benefits; widow’s benefits; or widower’s benefits;

    ▪ Your Social Security benefits are taxed at the federal level;

    ▪ You (or your spouse, if married and filing jointly) have reached full retirement age as defined by Social Security Administration regulation; and

    ▪ Your federal AGI falls below a certain threshold (please see table below). The income thresholds will be adjusted annually for inflation.

    You may qualify for the modification for taxable Social Security income

    If you are:

    and your federal AGI is less than:

    single, head of household, or married filing separately

    less than $80,000

    a married individual filing jointly, or a qualifying widow, or a qualifying widower

    less than $100,000

    Note: First column refers to filing status on your Rhode Island personal income tax return. For a married couple filing a joint Rhode Island return, income threshold applies to couple’s combined federal AGI.

    "If you clear all of those hurdles, the amount of your income that will be taxed by Rhode Island will be reduced by the amount of your Social Security benefits taxed at the federal level.

    "For example, suppose that your federal AGI is $50,000, which includes $10,000 of taxable Social Security benefits. Ordinarily, the entire $50,000 would be subject to Rhode Island personal income tax. However, if you qualify for the modification, only $40,000 of your federal AGI will end up being taxed by Rhode Island. Thus, assuming you are in the 3.75 percent Rhode Island tax bracket, you could save $375 in Rhode Island personal income tax in this example. (For convenience, this example does not take into account other factors for Rhode Island personal income tax purposes, such as other modifications that could decrease or increase your income; the Rhode Island standard deduction; personal exemptions; tax credits; and use tax.) 

    "Effective: Tax years beginning on or after January 1, 2016

    "Citation: RIGL § 44-30-12" (Source: Rhode Island Division of Taxation, Summary of Legislative Changes, July 22, 2015, pdf, pages 8-9).

    Utah provides a retirement income tax credit to offset state income tax on taxable Social Security benefits and other types of pension and annuity income.

    Vermont follows the federal rules for determining the taxable portion of Social Security benefits. "Taxable income," the Vermont Department of Taxes explains, "is defined in 32 V.S.A. § 5811(21) as federal taxable income with certain additions and subtractions." 

    West Virginia follows the federal rules for determining the taxable portion of Social Security benefits. "Social Security benefits that are taxable on your federal return are also taxable to West Virginia," the State Tax Department explains in their 2015 personal income tax booklet (pdf).

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