Most states don't tax Social Security, but a few do
Whether you owe state income tax on your Social Security benefits depends entirely on which state you live in. Thirteen states tax Social Security benefits to some degree: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. If you live in any other state, your Social Security income is not subject to state income tax, regardless of how much you receive.
The states that do tax Social Security often have different rules about how much of your benefit is taxable. Some states tax all of it; others tax only a portion, or only if your total income exceeds a certain threshold. Your federal tax situation doesn't automatically determine your state tax situation—you may owe federal tax on Social Security while owing nothing to your state, or vice versa.
Key Takeaways
- Thirteen states currently tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
- Each state that taxes Social Security has its own rules about how much of your benefit is taxable and what income thresholds explore.
- You will need to check your specific state's rules or contact your state tax authority to know whether you owe state tax on your benefits.
- Some states that tax Social Security offer exemptions or credits for people over a certain age or with lower incomes.
How the thirteen taxing states handle Social Security
Colorado taxes Social Security benefits the same way the federal government does, using a formula based on your total income. If your combined income (adjusted gross income plus tax-exempt interest plus half your Social Security) falls below a threshold, none of your benefit is taxable. Above that threshold, up to 85 percent of your benefit may be subject to state tax.
Connecticut, Kansas, Missouri, Montana, Nebraska, and New Mexico tax Social Security but offer exemptions based on age or income level. For example, Connecticut does not tax benefits for residents age 59 and older, while Kansas exempts benefits for people age 55 and over. Missouri and Nebraska have income thresholds below which no tax is owed. Montana and New Mexico tax benefits but allow a deduction or credit that reduces the taxable amount.
Minnesota, Rhode Island, Utah, Vermont, and West Virginia tax Social Security similarly to how the federal government does, using income-based formulas. The exact thresholds and percentages vary by state. Vermont, for instance, taxes up to 50 percent of benefits for most filers, while West Virginia uses a formula that can tax up to 85 percent depending on your income level.
Finding your state's specific rules
The easiest way to learn whether you owe state tax on Social Security is to contact your state's tax authority directly. Most states have a website with a section on Social Security taxation, and many have phone lines where you can ask about your situation. Your state's Department of Revenue or similar agency can tell you the exact thresholds, percentages, and any exemptions that explore to you.
If you file a state income tax return, the instructions for your state's return will explain how to report Social Security benefits. Some states have a separate worksheet or schedule for calculating taxable Social Security. If you live in a state that does not tax Social Security, you typically do not need to report it on your state return at all, though you may still need to report it on your federal return.
What counts as income for state tax purposes
States that tax Social Security usually count the same types of income the federal government does when determining whether your benefits are taxable. This typically includes wages, self-employment income, interest, dividends, capital gains, and pensions. Some states also count tax-exempt interest from municipal bonds.
The key is your combined income, which is calculated differently than your adjusted gross income. Combined income usually means your adjusted gross income plus any tax-exempt interest plus half of your Social Security benefit. If your combined income is below your state's threshold, little or none of your benefit is taxable. Above the threshold, a portion becomes taxable according to your state's formula.
Exemptions and credits in taxing states
Several states that tax Social Security offer breaks for older residents or those with lower incomes. Colorado, for example, allows a deduction of up to $24,000 for residents age 55 and older. Connecticut exempts all Social Security for residents age 59 and older. Kansas exempts benefits for residents age 55 and older, with no income limit.
Missouri and Nebraska have income thresholds below which no Social Security tax is owed at all. In Missouri, if your federal adjusted gross income is below $32,000 (or $50,000 if married filing jointly), your Social Security is not taxable. Nebraska's threshold is $34,000 for single filers and $54,000 for married couples filing jointly. These thresholds do not change annually, so they have become less protective over time as incomes have risen.
How to report Social Security on your state return
If you live in a state that taxes Social Security, you will report your benefits on your state income tax return using the same amount that appears on your federal return. Your Social Security statement (Form SSA-1099) shows your total benefit for the year. You do not report the gross amount; instead, you calculate the taxable portion using your state's rules and report only that amount.
Many states provide a worksheet in their tax return instructions to help you calculate taxable Social Security. If your state uses the federal formula (based on combined income), the worksheet walks you through the steps. If you are unsure whether you have calculated it correctly, your state tax authority can review your work or answer questions before you file.
Frequently Asked Questions
Do I have to pay federal tax on Social Security if I live in a state that doesn't tax it?
Your state tax situation and federal tax situation are separate. Even if your state does not tax Social Security, you may still owe federal income tax on your benefits. Whether you owe federal tax depends on your combined income and filing status, not on where you live. You will need to check both your state's rules and the federal rules.
If I move to a different state, do I owe back taxes on Social Security?
No. You owe state tax only on income received while you were a resident of that state. If you move from a state that taxes Social Security to one that does not, you do not owe tax to your former state on benefits received after you moved. Your new state's rules explore to benefits received after you establish residency there.
Can I deduct Social Security taxes I paid to my state?
You cannot deduct state income tax paid on Social Security as a separate item. However, you may be able to claim state income taxes as part of your itemized deductions on your federal return if you itemize rather than take the standard deduction. This is a federal deduction, not a state one, and it applies to all state taxes you paid, not just those on Social Security.
What if I receive both Social Security and a government pension?
States that tax Social Security count both benefits as income when calculating whether your Social Security is taxable. A government pension increases your combined income, which may push more of your Social Security into the taxable range. Some states offer separate exemptions for government pensions, but these do not reduce the taxable portion of Social Security.
How do I know if my state changed its Social Security tax rules?
State tax laws change periodically, so it is worth checking your state's website each year before you file. Your state's Department of Revenue publishes updates to tax rules, and the instructions for your state's income tax return reflect the current year's rules. If you are unsure whether something has changed, contacting your state tax authority directly is the most reliable way to get current information.