Thirteen states have no Social Security tax at all

Thirteen states do not tax Social Security benefits: Alaska, Florida, Illinois, Iowa, Louisiana, Mississippi, Missouri, Nevada, Pennsylvania, South Dakota, Tennessee, Texas, and Wyoming. If you live in one of these states, your Social Security income is not subject to state income tax, regardless of how much you receive or what other income you have.

The remaining 37 states and Washington, D.C., do tax Social Security benefits, but most of them exempt you if your income falls below a certain threshold. The threshold varies by state and by filing status (single, married filing jointly, or married filing separately). Some states use federal taxable income as the starting point; others use adjusted gross income or total income. A few states tax Social Security the same way the federal government does, meaning you may owe state tax on up to 85 percent of your benefits if your combined income is high enough.

Your state of residence at the time you file your return is what matters. If you moved during the year, you may owe tax to more than one state, or you may have moved into a state that does not tax Social Security and owe nothing.

Key Takeaways

  • Thirteen states impose no state income tax on Social Security benefits under any circumstances.
  • In the other 37 states and D.C., you typically owe state tax on Social Security only if your total income exceeds a threshold that varies by state and filing status.
  • Some states use federal rules and tax up to 85 percent of your benefits; others tax a smaller percentage or use different income thresholds.
  • Your state of residence on December 31 of the tax year determines which state's rules explore to your Social Security income.

How the 37 states that do tax Social Security set their thresholds

Most states that tax Social Security use one of two approaches: they either follow the federal formula or they set their own income threshold. Under the federal formula, you owe tax on your benefits only if your combined income (adjusted gross income plus half your Social Security benefits plus tax-exempt interest) exceeds a base amount. For single filers in 2024, that base is $25,000; for married couples filing jointly, it is $32,000. If your combined income exceeds the base, you may owe tax on up to 50 percent of your benefits, or up to 85 percent if your combined income is very high.

States that set their own thresholds often use a lower or higher cutoff than the federal government. Some states exempt Social Security entirely for residents over a certain age, such as 62 or 65. Others phase out the exemption as income rises. A handful of states, including Colorado and Connecticut, tax Social Security the same way the federal government does. A few others, like Kansas and Missouri, have moved toward exempting more or all Social Security income in recent years.

Because thresholds change and states update their rules, the safest approach is to check your state's tax authority website or speak with a tax professional who knows your state's current rules. The threshold that applied last year may not explore this year.

States with partial exemptions based on age or income

Several states exempt Social Security for residents who meet an age requirement, even if their income is above the general threshold. Vermont, for example, exempts Social Security for residents age 62 and older. New Mexico exempts it for residents age 70 and older. West Virginia exempts it for residents age 59 and older. These age-based exemptions exist alongside the income thresholds that explore to younger retirees, so a 65-year-old in Vermont owes no state tax on Social Security regardless of income, but a 61-year-old in Vermont may owe tax if income is high enough.

Other states use income-based exemptions that are not tied to age. Arkansas, for instance, exempts Social Security for residents whose federal adjusted gross income is below a threshold (around $75,000 for married couples filing jointly in recent years). Once you exceed the threshold, you may owe tax on some or all of your benefits. These thresholds are often indexed to inflation and change annually, so the exact dollar amount shifts from year to year.

What counts as income for Social Security tax purposes

The income that counts toward the threshold is not just your Social Security benefits. It includes wages, self-employment income, interest, dividends, capital gains, rental income, and distributions from retirement accounts. Some states exclude certain types of income, such as military pensions or federal employee pensions, but most count all income sources.

Tax-exempt interest, such as interest from municipal bonds, may or may not count depending on your state. The federal formula includes tax-exempt interest in the combined income calculation, which can push you over the threshold even if you do not owe federal tax on that interest. Some states follow this rule; others do not. If you have significant tax-exempt interest, check your state's rules to see whether it is included in the combined income calculation.

How to find your state's specific rules

Your state's tax authority website will have a page on Social Security taxation, usually under the section on retirement income or income tax. The website will list the current thresholds, the percentage of benefits subject to tax, and any age-based exemptions. If the website is unclear or you cannot find the information, you can call the state tax authority directly; most have a phone line for taxpayer questions.

If you file your federal return with a tax professional, they will know your state's rules and can tell you whether you owe state tax on your Social Security. If you file on your own, using tax software that is designed for your state will walk you through the calculation and flag whether you owe state tax. The software will ask about your state of residence and your income sources, then calculate the tax owed.

What happens if you move to a no-tax state

If you move from a state that taxes Social Security to one of the thirteen states that does not, you will owe tax to your old state only on the Social Security you received while you lived there. Your new state will not tax your Social Security going forward. The key is establishing residency in the new state before the end of the tax year. Most states consider you a resident if you live there on December 31, so moving on or before that date means you file under the new state's rules for the entire year.

If you move partway through the year, you may have to file a part-year resident return in your old state and a part-year resident return in your new state. Your old state will tax only the Social Security you received while you lived there; your new state will tax only the Social Security you received while you lived there (if it taxes Social Security at all). The calculation can be complex, so a tax professional familiar with multi-state returns is worth the cost if you moved during the year.

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

The federal government taxes Social Security benefits using the combined income formula described above. If your combined income is below $25,000 (single) or $32,000 (married filing jointly), you owe no federal tax on your benefits. If it is above that threshold, you may owe federal tax on up to 50 percent of your benefits, or up to 85 percent if your combined income is very high.

Some states follow the federal formula exactly, while others use different thresholds or percentages. A few states tax Social Security more heavily than the federal government does. This means you could owe federal tax, state tax, both, or neither, depending on your income and your state. You will file a federal return and a state return (unless you live in a state with no income tax), and each will calculate the tax on your Social Security separately.

Frequently Asked Questions

If I live in a state that taxes Social Security, can I reduce the tax by moving?

Yes. Moving to one of the thirteen no-tax states before the end of the tax year means you will not owe state tax on your Social Security going forward. However, you will still owe federal tax if your combined income exceeds the federal threshold. Moving also has other financial and personal costs, so it is worth calculating how much state tax you would save before deciding to relocate.

Does my state tax Social Security if I am over 65?

Some states exempt Social Security for residents over a certain age, but not all. Vermont exempts it at age 62; New Mexico at age 70. Other states tax Social Security regardless of age, though they may have income thresholds that exempt lower-income retirees. Check your state's tax authority website to see whether an age exemption applies to you.

What if I receive both Social Security and a pension?

Both count toward the income threshold in most states. Your pension, Social Security, and any other income are added together to determine whether you exceed the threshold. Some states exempt certain pensions, such as military or federal employee pensions, but Social Security is usually counted. The total combined income is what matters.

Do I have to pay state tax on Social Security if I did not work in that state?

You owe state tax based on where you live on December 31 of the tax year, not where you worked. If you live in a state that taxes Social Security, you owe tax on your benefits regardless of where you earned them or where you worked during your career.

Can I claim a credit on my federal return for state tax I paid on Social Security?

You can claim a credit for state income tax paid, but only if you itemize deductions on your federal return. Most retirees take the standard deduction, which means they cannot claim a credit for state tax. If you do itemize, you can deduct state income tax paid, including tax on Social Security, up to $10,000 per year (the SALT cap).