Is your state taking a bite out of your social security? Find out now!
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As we grow older, we often look forward to the stability that Social Security provides in retirement.
But what if we told you that, depending on where you live, your state might be dipping into those hard-earned benefits?
That’s right—while many states offer a tax break on Social Security, a handful may still take a slice.
Here at The GrayVine, we want to keep you well-informed and prepared, so let’s explore how state taxes could impact your Social Security checks.
Understanding how your state handles Social Security taxes can help you plan better for your future and ensure you’re not caught off guard.
Understanding How State Taxes Could Affect Your Social Security
We all know that the Social Security benefits you receive—whether from retirement, disability, or survivor benefits—are subject to federal taxes if your total income surpasses certain thresholds.
But what about state taxes? That’s where things get a bit trickier. Some states choose to tax Social Security benefits, while others offer exemptions or deductions.
Understanding these rules can play a big role in your financial planning.
Currently, there are ten states that tax Social Security benefits, and each has its own set of rules, exemptions, and income thresholds. Let’s dive into the specifics.
The States That Could Tax Your Social Security Benefits
Here are the ten states where your Social Security checks might not be entirely free from state taxes:
1. Colorado
If you’re 65 or older, you can deduct your Social Security benefits from state taxes if they’re included in your federal taxable income and exceed $24,000. Younger filers may be able to exclude up to $20,000. Keep an eye on upcoming changes in 2025.
2. Connecticut
Single filers earning below $75,000 and married couples earning under $100,000 don’t have to worry. But if your income exceeds those limits, up to 25% of your Social Security benefits could be taxable.
3. Minnesota
This state offers a partial or full exemption from income tax on Social Security benefits, with phase-outs beginning at $105,380 for married filers and $82,190 for singles.
4. Montana
Your adjusted gross income (AGI) will determine how much tax you owe on Social Security benefits.
5. Nebraska
The good news? In 2024, 80% of your Social Security benefits will be exempt, and by 2025, they’ll be fully exempt from state taxes.
6. New Mexico
Most recipients are in the clear. However, if you’re a high earner, you might have to pay tax. Exemptions apply to single filers earning below $100,000 and married couples under $150,000.
7. Rhode Island
If your income exceeds $104,200 for single filers or $130,250 for joint filers, or if you’re younger than full retirement age, you could be subject to taxes on your benefits.
8. Utah
If your income reaches $45,000 (or $75,000 for heads of household and joint filers), your Social Security benefits may be taxed, though you may qualify for a nonrefundable credit below these thresholds.
9. Vermont
Single filers with an AGI under $50,000 and joint filers under $65,000 won’t pay tax on their Social Security benefits. Above these levels, the exemption phases out gradually.
10. West Virginia
If you’re a married couple filing jointly with income over $100,000, or a single filer with income above $50,000, you may face taxes on your benefits.
Smart Strategies to Minimize Taxes on Your Social Security
While state taxes on Social Security benefits might feel beyond your control, there are still ways you can minimize their impact:
Understanding your state’s approach to Social Security taxation is essential for managing your retirement income. Tax policies change, and staying informed ensures that you’re prepared for any shifts.
Every dollar counts in retirement, and keeping an eye on these laws can help you protect your financial security.
Have you encountered state taxes on your Social Security benefits? Do you have any tips or strategies to minimize their impact? We’d love to hear your stories and advice. Share your thoughts in the comments below, and let’s work together to navigate the complexities of retirement taxation.
Related articles:
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Big changes ahead: Social Security payroll tax set to end?
New tax changes could put more money in retirees’ pockets—but at what cost?
But what if we told you that, depending on where you live, your state might be dipping into those hard-earned benefits?
That’s right—while many states offer a tax break on Social Security, a handful may still take a slice.
Here at The GrayVine, we want to keep you well-informed and prepared, so let’s explore how state taxes could impact your Social Security checks.
Understanding how your state handles Social Security taxes can help you plan better for your future and ensure you’re not caught off guard.
Discover how your state might impact your Social Security benefits—some states tax them, while others offer exemptions. Image Source: Pexels / Photo By: Kaboompics.com.
Understanding How State Taxes Could Affect Your Social Security
We all know that the Social Security benefits you receive—whether from retirement, disability, or survivor benefits—are subject to federal taxes if your total income surpasses certain thresholds.
But what about state taxes? That’s where things get a bit trickier. Some states choose to tax Social Security benefits, while others offer exemptions or deductions.
Understanding these rules can play a big role in your financial planning.
Currently, there are ten states that tax Social Security benefits, and each has its own set of rules, exemptions, and income thresholds. Let’s dive into the specifics.
The States That Could Tax Your Social Security Benefits
Here are the ten states where your Social Security checks might not be entirely free from state taxes:
1. Colorado
If you’re 65 or older, you can deduct your Social Security benefits from state taxes if they’re included in your federal taxable income and exceed $24,000. Younger filers may be able to exclude up to $20,000. Keep an eye on upcoming changes in 2025.
2. Connecticut
Single filers earning below $75,000 and married couples earning under $100,000 don’t have to worry. But if your income exceeds those limits, up to 25% of your Social Security benefits could be taxable.
3. Minnesota
This state offers a partial or full exemption from income tax on Social Security benefits, with phase-outs beginning at $105,380 for married filers and $82,190 for singles.
4. Montana
Your adjusted gross income (AGI) will determine how much tax you owe on Social Security benefits.
Montana's stunning landscapes offer a breathtaking backdrop, making it a great place to enjoy the peace of retirement—without the added tax on Social Security benefits. Image Source: YouTube / Something Different Films.
5. Nebraska
The good news? In 2024, 80% of your Social Security benefits will be exempt, and by 2025, they’ll be fully exempt from state taxes.
6. New Mexico
Most recipients are in the clear. However, if you’re a high earner, you might have to pay tax. Exemptions apply to single filers earning below $100,000 and married couples under $150,000.
7. Rhode Island
If your income exceeds $104,200 for single filers or $130,250 for joint filers, or if you’re younger than full retirement age, you could be subject to taxes on your benefits.
8. Utah
If your income reaches $45,000 (or $75,000 for heads of household and joint filers), your Social Security benefits may be taxed, though you may qualify for a nonrefundable credit below these thresholds.
9. Vermont
Single filers with an AGI under $50,000 and joint filers under $65,000 won’t pay tax on their Social Security benefits. Above these levels, the exemption phases out gradually.
10. West Virginia
If you’re a married couple filing jointly with income over $100,000, or a single filer with income above $50,000, you may face taxes on your benefits.
Smart Strategies to Minimize Taxes on Your Social Security
While state taxes on Social Security benefits might feel beyond your control, there are still ways you can minimize their impact:
- Invest in a Roth IRA: Withdrawals from Roth IRAs aren’t considered taxable income, which can help keep you in a lower tax bracket.
- Health Savings Accounts (HSAs): If you have an HSA, you can withdraw funds tax-free to cover qualified medical expenses.
- Stay Informed: Some states, like Missouri, are moving toward eliminating taxes on Social Security benefits. Monitoring these changes could lead to savings down the line.
Understanding your state’s approach to Social Security taxation is essential for managing your retirement income. Tax policies change, and staying informed ensures that you’re prepared for any shifts.
Every dollar counts in retirement, and keeping an eye on these laws can help you protect your financial security.
Have you encountered state taxes on your Social Security benefits? Do you have any tips or strategies to minimize their impact? We’d love to hear your stories and advice. Share your thoughts in the comments below, and let’s work together to navigate the complexities of retirement taxation.
Related articles:
Unlock hidden savings on your taxes with this guide to federal tax credits
Big changes ahead: Social Security payroll tax set to end?
New tax changes could put more money in retirees’ pockets—but at what cost?
