Social Security benefits are a crucial income source for many American retirees. Over 51 million people received retired worker benefits as of December 2024. However, these benefits may be subject to taxes, depending on where you live and your income level.
The good news is that most states do not tax Social Security benefits. In fact, 41 states and Washington, D.C. currently do not tax these benefits. This list includes states like Massachusetts, Mississippi, New Hampshire, North Carolina, North Dakota, Pennsylvania, South Carolina, and South Dakota.
Some states, such as Missouri, Nebraska, and Kansas, recently eliminated their Social Security taxes in 2024. Unfortunately, there are still nine states that do tax Social Security benefits. These states are Connecticut, Rhode Island, and West Virginia.
However, some of these states are working on legislation to reduce or eliminate these taxes.
States potentially taxing Social Security benefits
For example, West Virginia has enacted a law to phase out the state income tax on Social Security over three years for individuals making under $50,000 and joint filers making under $100,000.
It’s important to note that even if your state doesn’t tax Social Security, you may still be subject to federal taxes on your benefits. The IRS uses your “combined income” to calculate your tax bill. This includes all your non-Social Security income, nontaxable interest, and half of your Social Security benefits.
The amount of your benefits that are taxable depends on your combined income and filing status. For single filers with a combined income between $25,000 and $34,000, up to 50% of benefits may be taxable. If your combined income is over $34,000, up to 85% of benefits may be taxable.
For married couples filing jointly, the thresholds are $32,000 to $44,000 for up to 50% of benefits being taxable, and over $44,000 for up to 85% being taxable. Knowing which states tax Social Security benefits and understanding the federal tax implications can help you plan for retirement and maximize your benefits. It’s always a good idea to consult with a tax professional or refer to your state’s specific tax guidelines for the most accurate information.
