Most retirees rely heavily on the payments provided by Social Security. The National Academy of Social Insurance (NASI) reports that Social Security benefits account for more than half of the retirement income of 61% of recipients. Furthermore, for 20% of individuals aged 65 and older, Social Security benefits constitute the sole source of income for them. Additionally, the NASI points out: “Overall, Social Security keeps 22 million Americans out of poverty, including nearly 15 million seniors and 1 million children.”
It is obvious that retirees will want to maintain every dollar of their benefits if they are able to do so, given all of the aforementioned factors. The vast majority of people will be able to keep the most of their benefits; however, some individuals may be subject to the taxation of benefits by the federal government. A few states do offer tax incentives, but the majority of states do not.
These 41 states don’t tax Social Security
First, let’s begin with some encouraging news. The 41 states listed below, as well as the District of Columbia, do not impose taxes on Social Security benefits. There is a decent possibility that you are a resident of one of these states.
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin
- Washington, D.C.
- Wyoming
These 9 states do tax Social Security benefits
However, there are nine states that do impose taxes on Social Security payouts. Other states do not. However, in the majority of instances, this bad news is not actually that horrible. There are frequently income or age thresholds, and citizens who are older or have lower incomes are exempt from the tax. As a result, many retirees in these states will pay very little or no taxes on their Social Security benefits to their state.
Here are the nine states:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
An illustration of this would be the fact that in West Virginia, individuals who have a federal adjusted gross income (AGI) of $50,000 or less, or couples who file jointly and have an AGI of $100,000 or less, will not be subject to taxation on their Social Security benefits. While this is going on, the state of Utah is doing away with Social Security taxes for everyone earning up to $90,000.
In passing, I should mention that the number of states that impose taxes on Social Security income has been decreasing. 13 states, for instance, imposed taxes on Social Security as of the year 2016. This means that by the time you reach retirement age, your state might not tax it.
Your big Social Security picture
Make sure that you are not concentrating too much on only the Social Security taxes or any other form of tax, regardless of the state in which you reside. Always keep in mind that every state requires revenue. Consequently, if it does not impose taxes on income from retirement (or any other type of income), it may have a more expansive taxation authority when it comes to property taxes or sales taxes.
In the meantime, educate yourself about your Social Security benefits, regardless of whether you are ready to file for them or whether retirement is decades and decades away. Be aware of the following information:
- By registering for a my Social Security account on the website of the Social Security Administration (SSA), you will be able to obtain an estimate of the benefits that you will receive in the future. Doing so will provide you with access to estimations of the advantages you will receive in the future. A recent study found that the average monthly retirement benefit was $2,002 (as of May 2025), which is equivalent to around $24,000 annually. Because that is not a lot, you should begin making preparations to build up other sources of income for your retirement.
- Increasing the amount of our future Social Security benefit checks is something that the majority of us should be able to do because there are a number of ways to do so, such as delaying the time when we claim them or earning more money. (A study indicated that the optimal time to maximize benefits for the majority of people is to wait until they are 70 years old.)
- The Social Security Administration’s funds are decreasing, which means that our future benefits are not guaranteed. In the event that nothing is done, it is possible that benefits may also decrease in a few years, possibly reaching 81% of what we are owed or even less. Keeping abreast of developments in Social Security, such as the modifications brought about by President Trump’s “big, beautiful bill,” is a prudent course of action because some of these changes are likely to have a negative impact on the prognosis for Social Security.
Because retirement planning is of utmost importance, you should set aside some time to deliberate over matters such as the amount of income you will require to retire and the means by which you will accumulate it. Determine a course of action, and then be sure to stick to it.
It is the Social Security benefit of $23,760 that the majority of retirees utterly ignore.
If you are like the majority of people in the United States, you are at least a few years behind on your savings for retirement. On the other hand, there are a few “Social Security secrets” that are not widely recognized that could assist secure an increase in your retirement income.
Using a simple strategy could result in an increase of up to $23,760 in your annual income. We are convinced that you will be able to retire with the peace of mind that we are all seeking once you have learned how to make the most of the advantages that you receive from Social Security. Join Stock Advisor to acquire additional knowledge regarding these methods.
