States That Tax Social Security

In this article...
  • The taxes you pay in retirement can vary depending where you live. Learn about the states that tax Social Security and the best places to retire financially.

13 States That Tax Social Security Benefits 

Many Americans count on Social Security for retirement income, but the amount of tax you pay on these benefits varies depending where you live. If you're looking to settle in a location with low taxes for retirees, take a look at this list of states that tax Social Security income. We also highlight some of the states with the lowest taxes for older adults.

What Are the States That Tax Social Security?

Social Security payments are subject to federal tax depending on income thresholds. There are 37 states that don't tax Social Security, but the remaining jurisdictions include these payments, or a portion of them, in their calculation of taxable income.

Here are the 13 states that tax Social Security benefits:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia (see below)

West Virginia is working to eliminate this tax. In the 2021 tax year, taxpayers in this state can exclude up to 65% of their Social Security benefits from taxable income. By the 2022 tax year, all Social Security income is no longer taxable in West Virginia. 

How Do These States Tax Social Security Income?

The states that tax Social Security have different ways of calculating the taxable portion. This includes:

  • Using the same income threshold guidelines as the federal government
  • Exempting the portion of Social Security benefits included in federal taxable income
  • Reducing the taxable portion based on age, income or other factors

Check with your local state tax office for details.

Choosing a Tax-Friendly State for Retirement

If you're interested in settling in a location that's financially attractive for older adults, be sure to look beyond states that tax Social Security. Property, income, inheritance and sales taxes can all add to your burden in retirement, so it's important to consider the bigger picture. 

Financial publisher Kiplinger conducted a comprehensive study of taxes older adults can expect to pay in each state. This research is based on hypothetical retired couples with income that includes wages, Social Security, pensions, interest, dividends and capital gains.

Delaware took the top spot in Kiplinger's list of the most tax-friendly states for retirees. In addition to not taxing Social Security benefits, Delaware doesn't have sales, estate or inheritance tax, and low property taxes. Hawaii, the District of Columbia, Wyoming and Nevada rounded out the top five.