Twelve states in the U.S. impose income taxes on Social Security benefits, as of tax year 2021. The other 38 states and Washington, D.C. don't tax Social Security benefits. Some states follow federal rules for determining the taxable portion of Social Security benefits, while other have their own calculations for how much of a person's Social Security benefits are subject to tax.
State-by-State Taxation of Social Security Benefits
Here's a state-by-state breakdown. And below that, you'll find more information on the 12 states that tax Social Security benefits.
|State||Do You Have To Pay Income Tax on Social Security Benefits?|
|West Virginia||Yes, but phasing it out|
12 States Impose Income Tax on Social Security Income
The below 12 states tax Social Security benefits to varying degrees.
Colorado's pension-subtraction system exempts up to $24,000 in pension and annuity income, including some Social Security benefits. The exemption is based on your age, 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. Your Social Security benefits are exempt from Kansas income tax if your federal adjusted gross income (AGI) is $75,000 or less, regardless of your filing status.
Minnesota partially taxes Social Security benefits. The state allows a subtraction from benefits ranging from $2,645 for married taxpayers who file separately, to $4,130 for single taxpayers, to $5,290 for married taxpayers who file jointly. The rule is subject to phaseouts starting at incomes of $80,270 for joint married filers, $40,135 for married taxpayers filing separately, and $62,710 for heads of household and single filers. The subtraction is less for these incomes and eventually phases out entirely as you earn more.
Missouri exempts Social Security benefits from state tax, provided that the individual is age 62 or older and has adjusted gross income of less than $100,000 if married and filing jointly, or $85,000 for all other filing statuses. Those who earn more than that might qualify for the exemption if they're disabled.
Montana asks residents to use the Montana Individual Income Tax Return to determine the portion of Social Security benefits that's taxable by the state (page 5 and page 6). That might be different from the federal amount.
Nebraska allows a deduction for Social Security income that's included in your federal adjusted gross income if your federal AGI is less than or equal to $59,960 for married couples filing jointly, or $44,460 for all other filers.
New Mexico follows the federal rules for including a portion of Social Security benefits as part of taxable income, but the state provides an $8,000 tax credit to eligible taxpayers age 65 or older to offset the tax on income, including income from Social Security benefits.
North Dakota used to tax income from Social Security benefits, but in November 2021, the governor signed Senate Bill 2351, which exempts Social Security benefits from state income tax, making North Dakota the 38th state.
Rhode Island has an exemption on Social Security taxation for those who have reached full retirement age as defined by the IRS. Eligible taxpayers must have federal AGIs of $88,950 if single, or $111,200 if married and filing jointly, for the 2021 tax year, the return you file in 2022.
In late 2019, Utah adopted a sweeping tax bill that includes a tax credit for Social Security benefits that are included in a taxpayer's federal adjusted gross income.
Vermont previously followed the federal rules for determining the taxable portion of Social Security benefits, and 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 available for AGIs of over $55,000 if single or over $70,000 if you're married and file jointly.
West Virginia follows federal rules for determining the taxable portion of Social Security benefits. Legislation passed in 2019 will eliminate state taxes on these benefits by 2022. Until it's phased out at the end of 2022, you can exclude 65% of Social Security benefits on your 2021 tax return.
How This Impacts Where You Retire
You could end up ahead anyway, even if you retire in one of the states that impose a tax on Social Security benefits if all other taxes in the state are favorable, such as sales tax, gasoline tax, or property tax. And you might still be subject to federal taxation on your benefits, even if you live in a state with no state-imposed tax. So just be sure to consider all financial aspects of moving to another state, especially if you are collecting Social Security benefits.
Colorado Department of Revenue. "FYI Income 25: Pension and Annuity Subtraction." Accessed Jan. 28, 2022.
State of Connecticut Department of Revenue Services. "Taxability of Social Security Benefits for Connecticut Income Tax Purposes," Page 1. Accessed Jan. 28, 2022.
Kansas Department of Revenue. "Frequently Asked Questions About Individual Income." Accessed Jan. 28, 2022.
Minnesota Department of Revenue. "Individual Income Tax Social Security Subtraction Increase." Accessed Jan. 28, 2022.
Missouri Department of Revenue. "Am I Eligible?" Accessed Jan. 28, 2022.
Montana Department of Revenue. "2021 Montana Individual Income Tax Return." Accessed Jan. 28, 2022.
Nebraska Department of Revenue. "2021 Nebraska Individual Income Tax Booklet." Page 16. Accessed Jan. 28, 2022
Taxation and Revenue New Mexico. "Frequently Asked Questions." Accessed Jan. 28, 2022.
North Dakota Office of the Governor. "UPDATED: Burgum Signs Legislation Providing $211M in Income Tax Relief for Approximately 500,000 North Dakotans." Accessed Jan. 28, 2022.
Rhode Island Department of Revenue Division of Taxation. "Inflation-Adjusted Amounts Set for Tax Year 2022," (Download PDF). Accessed Jan. 28, 2022.
Utah State Legislature. "Utah Code Section 59-10-1042: Nonrefundable Tax Credit for Social Security Benefits." Accessed Jan. 28, 2022.
Vermont Department of Taxes. "Social Security Exemption Overview." Accessed Jan. 28, 2022.
West Virginia Legislature. "Committee Substitute for House Bill 2001." Page 4. Accessed Jan. 28, 2022.
West Virginia State Tax Department. "West Virginia Personal Income Tax Act." Accessed Jan. 28, 2022.