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Most states don't tax Social Security, but some still do. See the list.
The annual cost-of-living adjustment Social Security recipients receive is both a blessing and a curse.
On the one hand, additional money, even if small, is welcome. On the other, those extra dollars can boost incomes just enough so beneficiaries may have to pay more taxes.
It's not only the federal government that will tax their Social Security, which can include monthly retirement, survivor and disability benefits, if total income exceeds certain amounts. Ten states also will levy a tax this year.
While each state has different rules on what or how they will tax your Social Security money, age and income usually determine if you pay.
It’s best to check with your state’s rules, but here are general guidelines on what you can expect:
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Which states tax Social Security benefits?
These ten states tax benefits:
- Colorado: If you're 65 or older and your Social Security benefits included in your federal taxable income top $24,000, you can subtract the full amount of those benefits from your Colorado tax returns. However, if you're under 65 years old, only up to the first $20,000 isn't taxed. The law will change for tax year 2025 to widen the age range to 55 to 64 for those who can take the full deduction up to $24,000.
- Connecticut: Single Social Security recipients with adjusted gross income (AGI) below $75,000 and $100,000 for married joint filers aren't taxed on their benefits. However, if your income tops those thresholds, 25% of your benefits may be taxed.
- Minnesota: Social Security benefits are fully or partially exempt from Minnesota’s income tax. Exemptions phase out at $105,380 if married and filing jointly or $82,190 for singles.
- Montana: Your AGI will determine how much tax you pay on your Social Security benefits.
- Nebraska: For tax year 2024, 80% of your Social Security benefits are exempt from tax. Starting in 2025, you won't have to pay any tax on Social Security checks.
- New Mexico: Only the very top earners must pay tax on their benefits. Most Social Security recipients don't. Single taxpayers with incomes below $100,000, married filing jointly couples earning less than $150,000, and married filing separately couples below $75,000 are exempt from Social Security tax.
- Rhode Island: If your income exceeds $104,200 for single filers or $130,250 if you're filing jointly, or if you're younger than what Social Security considers full retirement age, you get no tax break.
- Utah: Your benefits will be taxed if your income is $45,000 or more, $75,000 or more if you're head of household or married filing jointly, or $37,500 if married filing separately. Below those thresholds, you may be able to claim a nonrefundable credit for your benefits.
- Vermont: Single taxpayers with AGI below $50,000 and joint filers with AGI below $65,000 don't pay any tax on their benefits. For all other filers, the income threshold for the full exemption is $50,000. The exemption phases out beyond those levels.
- West Virginia: If your income hits $100,000 or more for couples filing jointly or $50,000 or more for single filers, at least some of your benefits may be taxed.
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How do states tax Social Security?
Methods vary widely so check your state’s laws, but these are generally the ways states will tax Social Security:
- Age-based. For example, Coloradans under 65 may owe taxes on Social Security benefits but older people generally don't.
- Income-based. New Mexico is one example of a state that only taxes Social Security for income above $100,000 for married couples filing jointly, surviving spouses and heads of household with more than $150,000, and married couples filing separately with more than $75,000 in income.
- Taxable income includes Social Security benefits. Minnesota taxes Social Security income that's considered taxable by the federal government, but some recipients qualify for a Social Security income subtraction when filing their state tax return.
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How much can you make from Social Security without having to pay taxes?
The best way to avoid taxes on Social Security benefits is to limit your income by investing with a Roth IRA while saving. Roth IRA withdrawals aren’t counted as taxable income. They are tax-free. The same goes for withdrawals from health savings accounts (HSAs) to pay for qualified expenses.
If you had a high deductible health insurance plan, contributed and invested money in an HSA and kept your qualified medical receipts, you can use those receipts against any withdrawal, tax free.
You can also hope your state eliminates its tax on Social Security benefits, which has been the trend. Missourians won't have to pay any tax on Social Security money beginning in tax year 2024.
What about Trump's plan to eliminate tax on Social Security?
President Donald Trump says he wants to stop taxing all Social Security income, but that would only apply to federal taxes. States would still be able to keep their taxes on the benefit.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.