Which States Tax Social Security Income?


Quick Answer

Thirteen states in the United States tax social security income, including Colorado, Connecticut, Kansas, Minnesota and Missouri along with Montana, Nebraska, New Mexico, North Dakota and Rhode Island. The final three states that tax social security are Utah, Vermont and West Virginia.

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Full Answer

Retirement options can be very different going from state to state due to the varied systems of tax collecting. As of June 2015, only seven states have no form of taxes on individual income/earnings whatsoever, including Alaska, Florida, Nevada, South Dakota and Washington along with Texas and Wyoming. Two other states, New Hampshire and Tennessee, impose income tax only on dividends and interests.

For the other 41 states, there is some form of income tax imposed on retired individuals. Most of these states only tax pension benefits, but the 13 aforementioned states tax income earned through social security. As of June 2015, individuals in North Dakota who served in the military can have a maximum of $5,000 waived from their tax bills, excluding social security benefits. In Rhode Island, retirees involved in the Railroad Retirement benefits program are exempt from retirement income taxes. Social security is taxed only to the extent of the federal tax rate. In Vermont, there are no exceptions to any form of retiree tax, besides Railroad Retirement benefits.

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