How Social Security taxation works by state

Thirty-seven states do not tax Social Security benefits at all. Thirteen states tax some or all of your benefits, depending on your income level and filing status. The states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Illinois taxes benefits only for people over 61, and treats the income differently than other states do.

Whether you owe state tax on your benefits depends on two things: which state you live in, and how much total income you have. Even in states that tax Social Security, most people with modest incomes pay nothing, because the states set income thresholds that exclude lower earners. If you live in a state that taxes benefits and your income is above the threshold, you may owe state tax on a portion of what you receive.

Key Takeaways

  • Thirteen states tax Social Security benefits for at least some residents: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, West Virginia, and Illinois (age 61+).
  • Each state that taxes benefits sets its own income threshold; below that threshold, you typically owe no state tax on benefits regardless of how much you receive.
  • Your "combined income" for state tax purposes usually means your adjusted gross income plus tax-exempt interest plus half your Social Security benefits.
  • Moving to a state that does not tax Social Security can reduce your state tax burden, though you must establish residency before the tax year in question.

Income thresholds in each taxing state

Colorado taxes benefits only if your combined income exceeds $20,000 (single filers) or $32,000 (married filing jointly). Connecticut taxes benefits when combined income is above $15,000 (single) or $20,000 (married). Kansas taxes benefits above $75,000 (single) or $100,000 (married), which means most Kansas residents pay nothing. Minnesota taxes benefits above $19,410 (single) or $24,250 (married).

Missouri taxes benefits above $32,000 (single) or $52,000 (married). Montana taxes benefits above $12,000 (single) or $15,000 (married). Nebraska taxes benefits above $22,500 (single) or $32,500 (married). New Mexico taxes benefits above $25,000 (single) or $32,000 (married). Rhode Island taxes benefits above $20,000 (single) or $25,000 (married). Utah taxes benefits above $25,000 (single) or $32,000 (married). Vermont taxes benefits above $20,000 (single) or $25,000 (married). West Virginia taxes benefits above $25,000 (single) or $32,000 (married).

Illinois residents age 61 and older pay no state income tax on Social Security benefits at any income level. Residents under 61 are treated like residents of other states and may owe tax if their combined income exceeds the threshold.

What counts as income for state tax purposes

Combined income is the figure each state uses to determine whether you cross the threshold. It is calculated as your adjusted gross income (the number on your federal tax return) plus any tax-exempt interest you earned plus half of your Social Security benefits. This is the same calculation the federal government uses, though the thresholds differ.

If you have a pension, wages, investment income, or other retirement account withdrawals, all of those count toward your combined income. Tax-exempt municipal bond interest also counts, even though it is not taxed federally. The only income that does not count is money from Roth conversions or Roth IRA withdrawals (after the account has been open five years), because those are not included in adjusted gross income.

How much of your benefits are taxed

If you live in a state that taxes benefits and your combined income exceeds the threshold, the state does not tax all of your benefits—only a portion. Most states that tax benefits use a two-tier system similar to the federal system: a smaller percentage of benefits is taxed at lower income levels, and a larger percentage at higher income levels.

For example, in Connecticut, if your combined income is between $15,000 and $20,000 (single), up to 50 percent of your benefits may be taxed. If your combined income exceeds $20,000, up to 85 percent may be taxed. Montana uses a different approach and taxes benefits as ordinary income once you cross the threshold, which can result in a higher tax bill. Check your state's tax department website or a tax professional to see the exact calculation for your situation.

Federal versus state taxation of benefits

The federal government taxes Social Security benefits in all states using the same income thresholds and formulas. Your state tax bill is separate from your federal tax bill. You may owe federal tax on your benefits but no state tax, or vice versa. Some people owe both.

When you file your federal return, you report your Social Security income on Form 1040. When you file your state return, you report it again, and your state applies its own rules. If your state taxes benefits, you will see the tax owed on your state return, not your federal return. This means you could pay tax on the same benefits twice—once to the federal government and once to your state—if both tax you.

Changing residency to avoid state taxation

If you live in a state that taxes Social Security and you are considering a move, moving to a non-taxing state can reduce your overall tax burden. However, the IRS and state tax agencies watch for people who claim residency in a no-tax state while maintaining ties to a taxing state. To establish residency, you must move your home, register to vote, get a driver's license, and update your address with banks, insurance companies, and any other institutions that have your information.

The tax year in which you become a resident matters. If you move partway through the year, some states tax you as a resident for the full year, while others prorate. Check the rules in both your old and new state before you move, because the timing can affect your tax bill for that year. You should also update your address with Social Security and any pension administrators so that tax documents are sent to the correct location.

Reporting state taxes on your return

When you file your state income tax return, you will report your Social Security benefits on a line designated for that purpose. The exact form varies by state—some use a worksheet, others a separate schedule. Your state tax software or a tax professional can walk you through the calculation.

If you have taxes withheld from your Social Security check, those withholdings go to the federal government, not your state. You cannot request state tax withholding from your benefits. If you owe state tax on your benefits, you will need to pay it when you file your return, or arrange quarterly estimated tax payments if the amount is large enough to require it. Contact your state tax department to find out the rules for your situation.

Frequently Asked Questions

Do I have to pay state tax on Social Security if I live in a state that taxes it?

Not necessarily. Even in states that tax benefits, most people with incomes below the state's threshold pay no state tax on their benefits. Calculate your combined income (adjusted gross income plus tax-exempt interest plus half your benefits) and compare it to your state's threshold. If you are below it, you owe nothing.

Can I reduce my state taxes by moving to a different state?

Yes, if you move to a state that does not tax Social Security. However, you must establish genuine residency—update your driver's license, voter registration, and address with banks and insurance companies. The IRS scrutinizes moves made solely for tax purposes, so document your move carefully.

What if I receive both Social Security and a pension?

Both count toward your combined income. Your pension is part of your adjusted gross income, and your Social Security is added separately. If the total exceeds your state's threshold, you may owe state tax on a portion of your benefits. A tax professional can help you calculate the exact amount.

Does federal tax withholding from my benefits cover state taxes?

No. Federal withholding goes only to the federal government. If you live in a state that taxes benefits and you owe state tax, you must pay it separately when you file your state return or through quarterly estimated payments. You cannot request state withholding from your Social Security check.

If I move mid-year, do I owe state tax for the whole year?

It depends on your state's rules. Some states tax you as a resident for the full year once you move there; others prorate your tax based on the number of months you were a resident. Check both your old and new state's tax rules before you move so you understand your tax obligation for that year.