Thirteen states tax Social Security benefits, and the rules differ by state

Thirteen states — Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia — tax at least some Social Security income. The other 37 states do not tax Social Security at all. Whether you owe state tax on your benefits depends on where you live and how much total income you have, because most of these states use the same federal formula to decide which benefits count as taxable.

The federal government taxes Social Security benefits based on your "combined income," which is your adjusted gross income plus nontaxable interest plus half your Social Security benefits. If that combined income exceeds a threshold — $25,000 for single filers, $32,000 for married filing jointly — you may owe federal tax on up to 85 percent of your benefits. The thirteen states that tax Social Security usually follow this same calculation, though some have their own thresholds or exemptions that make the state tax lighter than the federal version.

Key Takeaways

  • Thirteen states tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, and Illinois.
  • Most of these states use the federal combined-income formula to determine whether your benefits are taxable, so your total income matters as much as your benefit amount.
  • Several states exempt benefits for people over a certain age or with income below a threshold, so you may owe nothing even in a taxing state.
  • You can request that your state or the Social Security Administration withhold taxes from your benefit payments to avoid a large bill at tax time.

How each state calculates taxable Social Security benefits

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont follow the federal combined-income thresholds closely. If your combined income exceeds $25,000 (single) or $32,000 (married filing jointly), you calculate taxable benefits the same way you would for federal tax, then explore your state income tax rate to that amount.

West Virginia taxes Social Security benefits but allows a deduction of up to $20,000 per person, which means many retirees owe nothing. Illinois taxes benefits but exempts them entirely for people age 61 and older. New Mexico exempts benefits for residents age 65 and older. These exemptions mean you should check your specific state's rules even if your state appears on the list.

A few states have different thresholds or formulas. Missouri, for example, taxes benefits only if your federal adjusted gross income exceeds $32,000 (single) or $50,000 (married filing jointly) — higher than the federal thresholds. Always verify your state's current rules with your state tax authority or a tax preparer, because legislatures change these rules periodically.

States that do not tax Social Security benefits

Thirty-seven states do not tax Social Security benefits at all, regardless of your income or filing status. These states are: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming, and the District of Columbia.

If you live in one of these states, you will not owe state income tax on your Social Security benefits, even if your combined income is very high. You may still owe federal tax on your benefits, but your state will not claim a share. This is one reason many retirees move to states with no Social Security tax.

How to learn about you owe tax in your state

Start by confirming whether your state taxes Social Security. If it does not, you are done with that part of your tax planning. If it does, calculate your combined income: take your adjusted gross income, add any nontaxable interest (from municipal bonds, for example), and add half your Social Security benefits. Compare that total to your state's threshold.

If you are below the threshold, you owe nothing. If you are above it, you will need to calculate how much of your benefits are taxable using either the federal worksheet (which your state usually mirrors) or your state's own worksheet. Many state tax authority websites have worksheets or online calculators. If the math is unclear, a tax preparer familiar with your state's rules can walk you through it in one session.

Withholding taxes from your Social Security payments

If you expect to owe state tax on your benefits, you can ask the Social Security Administration to withhold federal income tax from your monthly payments using Form W-4V. You can request withholding of 7, 10, 15, or 22 percent of your benefit amount. Some states also allow you to request state tax withholding on the same form, though not all do.

Withholding is optional, but it prevents a large tax bill in April. If you do not withhold and you owe state tax, you will have to pay it when you file your return. You can change your withholding at any time by submitting a new Form W-4V to Social Security, or you can stop withholding if your situation changes. Keep in mind that withholding is not a payment — it is money held from your benefit and sent to the tax authority, so your monthly check will be smaller.

Combined income and how it affects your tax bill

Combined income is the key to whether you owe tax on Social Security, because even a small amount of other income can push you over the threshold. If you have a pension, wages from part-time work, interest, dividends, or rental income, all of that counts toward combined income. Half your Social Security benefit also counts, which means you can owe tax on benefits even if your other income is modest.

For example, if you are single with $20,000 in pension income and $10,000 in Social Security benefits, your combined income is $20,000 plus $5,000 (half your benefits) = $25,000. In a state that taxes Social Security, you are right at the federal threshold and may owe tax. If you also have $2,000 in interest income, your combined income becomes $27,000, and you will definitely owe tax on some of your benefits.

This is why retirees sometimes time the sale of assets or the withdrawal of retirement account funds carefully — moving a large transaction into a year when other income is lower can reduce or eliminate Social Security tax. A tax preparer can model different scenarios for you.

What to do if you live in a state that taxes Social Security

If you live in Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, or Illinois, take these steps. First, confirm whether your state has an age exemption or income threshold that might exclude you. West Virginia, Illinois, and New Mexico all have exemptions for older residents, so check whether you may have access to.

Second, gather your income documents: your Social Security statement (Form SSA-1099), your 1099s for pensions or other income, and your bank statements showing interest. Third, calculate your combined income using your state's worksheet. Fourth, decide whether to withhold taxes from your benefit payments or pay the tax when you file. Fifth, file your state return on time — most states require it even if you owe nothing, and filing late can trigger penalties.

If you move to a different state during the year, you may owe tax to both states for the portion of the year you lived in each. Some states offer credits for tax paid to another state, but not all do. If you are planning to move in retirement, consult a tax preparer about the timing and the tax consequences.

Frequently Asked Questions

Do I have to pay federal tax on Social Security even if my state does not tax it?

Yes. Federal tax on Social Security is separate from state tax. If your combined income exceeds $25,000 (single) or $32,000 (married filing jointly), you may owe federal tax on up to 85 percent of your benefits, regardless of where you live. You can request federal withholding on Form W-4V to avoid a large bill at tax time.

What counts as combined income for Social Security tax purposes?

Combined income is your adjusted gross income plus nontaxable interest plus half your Social Security benefits. Pensions, wages, interest, dividends, rental income, and capital gains all count. Withdrawals from Roth IRAs do not count, but withdrawals from traditional IRAs do. Half your Social Security benefit is always included in the calculation, even if you have no other income.

Can I reduce my combined income to avoid Social Security tax?

You can lower your combined income by reducing other sources of income — for example, by timing the sale of investments or delaying a large withdrawal from a retirement account. However, you cannot reduce the half of your Social Security benefit that counts toward combined income. A tax preparer can model different scenarios to show you the tax impact of timing decisions.

If I move to a state that does not tax Social Security, do I get a refund for taxes I already paid?

No. Taxes you paid to your previous state are not refunded when you move. However, your new state will not tax your benefits going forward. Some states offer credits for tax paid to another state if you moved during the tax year, but you should file returns in both states and check whether a credit applies.

What if I disagree with my state's calculation of taxable benefits?

Contact your state tax authority and ask for a review. You can also file an amended return if you believe you paid too much. If the dispute is large or complex, a tax preparer or tax attorney in your state can represent you. Most state tax authorities have an appeals process if you disagree with their information.