13 States That Tax Social Security Benefits
Are Social Security benefits taxable? You better believe it. Uncle Sam can tax up to 85% of your retirement benefits, and these 13 states can tack on a state tax, too.
Are Social Security benefits taxable? You better believe it. Uncle Sam taxes up to 85% of your benefits, depending on your income, and several states tack on additional taxes of their own. Utah, for one, treats Social Security benefits the same way as the feds. But other states tax Social Security benefits only if income exceeds a specified threshold amount. For example, Nebraska taxes Social Security benefits only if your income tops $43,000, or $58,000 if you're married and file taxes jointly.
Also remember that a tax on Social Security doesn't necessarily mean a state is unsuitable for retirement. North Dakota, one of the 13 states that taxes Social Security benefits, actually ranks as a tax-friendly state for retirees. That's why it's best to weigh all state taxes when researching the best places to retire. For each state, we've included a link to our full guide to state taxes on retirees. Take a look at the 13 states that tax Social Security benefits.
The state-by-state guide to taxes on retirees is updated annually based on information from state tax departments, the Tax Foundation, and the U.S. Census Bureau. Income tax rates and thresholds are for the 2019 tax year unless otherwise noted.
Colorado
- State Taxes on Social Security: For beneficiaries younger than 65, up to $20,000 of Social Security benefits can be excluded, along with other retirement income. Those 65 and older can exclude benefits and other retirement income up to $24,000. Also, Social Security income not taxed by the federal government is not added back to adjusted gross income for state income tax purposes.
- Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.65%, according to the Tax Foundation.
- Income Tax Range: All Colorado residents who have federal taxable income pay a flat rate of 4.5% for 2019 (the rate was temporarily reduced from 4.63% for 2019). Denver and a few other cities in Colorado also impose a monthly payroll tax.
- Property Taxes: In Colorado, the median property tax rate is $525 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Colorado.
Connecticut
- State Taxes on Social Security: Social Security is exempt for single taxpayers with federal adjusted gross income less than $75,000 and for married taxpayers filing jointly with federal AGI less than $100,000.
- Sales Tax: The state taxes most items at 6.35%, and localities are not allowed to add to that. Jewelry valued at more than $5,000 and clothing, footwear and accessories priced at more than $1,000 per item are taxable at 7.75%.
- Income Tax Range: Low: 3% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for single filers); High: 6.99% (on more than $1 million of taxable income for married joint filers and more than $500,000 for single filers).
- Property Taxes: The median property tax rate for Connecticut residents is $2,107 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: Connecticut imposes an estate tax on the transfer of estates valued at $5.1 million or more in 2020 ($7.1 million in 2021). Rates in 2020 range from 10% to 12% (10.8% to 12% in 2021). Connecticut is also the only state with a gift tax on assets you give away while alive. Gift taxes are due in 2020 only when the aggregate value of gifts made to any individual since 2005 exceeds $5.1 million ($7.1 million in 2021). The gift tax rates are the same as the estate tax rates.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Connecticut.
Kansas
- State Taxes on Social Security: Social Security benefits are exempt from Kansas income tax for residents with a federal adjusted gross income of $75,000 or less.
- Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.68%, according to the Tax Foundation. These rates apply to groceries as well. A food sales income tax credit of $125 per person is available to seniors and those claiming dependents; income limitations apply.
- Income Tax Range: Low: 3.1% (on taxable income from $5,001 to $30,000 for married joint filers and on taxable income from $2,501 to $15,000 for single filers); High: 5.7% (on more than $60,000 of taxable income for married joint filers and more than $30,000 for single filers).
- Property Taxes: In Kansas, the median property tax rate for homeowners is $1,406 for every $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no estate tax or inheritance tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Kansas.
Minnesota
- State Taxes on Social Security: Social Security income is taxable, but a married couple filing jointly can subtract $5,150 of their federally taxable Social Security benefits from their state income. (The break is $4,020 for single and head of household, $2,575 for married separate filers). Make more than $78,180 of income (for married filers) and the break gets phased out and is gone for those with more than $103,930 of taxable income. Those are the 2019 limits; they're adjusted each year for inflation.
- Sales Tax: 6.875% state levy. Localities can add as much as 2%, with an average combined rate of 7.46%, according to the Tax Foundation. Most clothing and footwear are exempt.
- Income Tax Range: Low: 5.35% (on up to $38,770 of taxable income for married joint filers and up to $26,520 for single filers); High: 9.85% (on more than $269,010 of taxable income married joint filers and more than $161,720 for single filers).
- Property Taxes: The Minnesota median property tax rate is $1,127 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: Minnesota's estate-tax exemption for 2020 is $3 million. Taxable gifts made within three years prior to death are considered part of the estate. Rates range from 13% to 16%.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Minnesota.
Missouri
- State Taxes on Social Security: Social Security benefits are not taxed for single filer with adjusted gross income of less than $85,000 and joint filers with AGI of less than $100,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.
- Sales Tax: 4.225% state levy. Localities can add as much as 5.625%, and the average combined rate is 8.18%, according to the Tax Foundation. Food that qualifies for the federal supplemental nutrition assistance program (SNAP) and is intended for home consumption is taxed at 1.225%; local tax is also due.
- Income Tax Range: 1.5% (on taxable income from $105 to $1,053); High: 5.4% (on more than $8,424 of taxable income). Kansas City and St. Louis also impose a 1% earnings tax. Residents can deduct some of their federal income tax from state taxable income (up to $10,000 for joint filers or $5,000 for single filers).
- Property Taxes: For Missouri residents, the median property tax rate is $970 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Missouri.
Montana
- State Taxes on Social Security: Social Security benefits are taxable. However, the taxable amount for Montana may be different from the federally taxable amount because Montana taxes some types of income that the federal government does not, and vice versa.
- Sales Tax: No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.
- Income Tax Range: Low: 1% (on up to $3,100 of taxable income); High: 6.9% (on more than $18,400 of taxable income). Montana permits filers to deduct some of their federal income tax.
- Property Taxes: For homeowners in Montana, the median property tax rate is $836 for every $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Montana.
Nebraska
- State Taxes on Social Security: A taxpayer may subtract Social Security income included in federal adjusted gross income if his or her federal adjusted gross income is less than or equal to $58,000 for married couples filing jointly, or $43,000 for all other filers.
- Sales Tax: 5.5% state levy. Localities can add as much as 2.5%, and the average combined rate is 6.93%, according to the Tax Foundation.
- Income Tax Range: Low: 2.46% (on up to $6,440 of taxable income for married joint filers and up to $3,230 for single filers); High: 6.84% (on more than $62,320 of taxable income for married joint filers and more than $31,160 for single filers).
- Property Taxes: In Nebraska, the median property tax rate for homeowners is $1,773 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no estate tax. Nebraska's inheritance tax is a local tax administered by counties and ranges from 1% to 18%. Assets passing to a spouse or charity are exempt from inheritance taxes.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Nebraska.
New Mexico
- State Taxes on Social Security: Benefits are taxed. But Social Security income can be included as part of an overall retirement-income exemption of up to $8,000 per person, subject to income restrictions.
- Sales Tax: 5.125% state levy. Localities can add as much as 4.125%, and the average combined rate is 7.82%, according to the Tax Foundation. New Mexico's tax is a gross receipts tax that covers most services.
- Income Tax Range: Low: 1.7% (on up to $8,000 of taxable income for married joint filers and up to $5,500 for single filers); High: 4.9% (on more than $24,000 of taxable income for married joint filers and more than $16,000 for single filers).
- Property Taxes: In New Mexico, the median property tax rate is $789 for every $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in New Mexico.
North Dakota
- State Taxes on Social Security: Social Security is exempt for single taxpayers with federal adjusted gross income less than $50,000 and for married taxpayers filing jointly with federal AGI less than $100,000.
- Sales Tax: 5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.86%, according to the Tax Foundation. New mobile homes, farm machinery and irrigation equipment used exclusively for agricultural purposes is taxed by the state at 3%. Local taxes may still apply.
- Income Tax Range: Low: 1.1% (on up to $65,900 of taxable income for married joint filers and up to $39,450 for single filers); High: 2.9% (on more than $433,200 of taxable income).
- Property Taxes: North Dakota's median property tax rate is $988 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax and no estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in North Dakota.
Rhode Island
- State Taxes on Social Security: Rhode Island doesn't tax Social Security benefits for single filers with up to $85,150 in adjusted gross income and joint filers with up to $106,400 in AGI. Those are the 2019 limits; they're adjusted each year for inflation.
- Sales Tax: 7% state levy. No general local sales taxes. Clothing and footwear with an item price of $250 or less are exempt.
- Income Tax Range: Low: 3.75% (on up to $64,050 of taxable income); High: 5.99% (on more than $145,600 of taxable income).
- Property Taxes: For homeowners in Rhode Island, the median property tax rate is $1,663 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: Rhode Island has an estate tax with an exclusion level that's indexed to inflation (the 2020 threshold is $1,579,922). Rates range from 0.8% to 16%. There is no inheritance tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Rhode Island.
Utah
- State Taxes on Social Security: Social Security benefits are taxed. Benefits may qualify for a retirement-income tax credit. Note that Utah enacted a tax reform plan in December 2019 that included a new tax credit for Social Security benefits; however, the law was later repealed before taking effect. The possibility of a different tax reform plan becoming law in 2020 exists.
- Sales Tax: State levy is 6.1%, including 1.25% in taxes that go to local governments. Localities can add up to an additional 2.95% as well; the average combined rate is 7.18%, according to the Tax Foundation. Groceries are taxed at 3%.
- Income Tax Range: Utah has a flat tax of 4.95%.
- Property Taxes: In Utah, the median property tax rate is $644 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Utah.
Vermont
- State Taxes on Social Security: Social Security benefits are exempt for single filers making less than $45,000 a year ($60,000 for joint filers). This break phases out as income rises and expires for single filers making more than $55,000 ($70,000 for joint filers).
- Sales Tax: 6% state levy. Municipalities can add 1% to that, but the average combined rate is 6.22%, according to the Tax Foundation. A wide range of clothing is exempt year-round.
- Income Tax Range: Low: 3.35% (on up to $66,150 of taxable income for married joint filers and up to $39,600 for single filers); High: 8.75% (on more than $243,750 of taxable income for married joint filers and more than $200,200 for single filers).
- Property Taxes: Vermont's median property tax rate is $1,880 per $100,000 of assessed home value.
- Inheritance and Estate Taxes: Estate tax is imposed on estates exceeding $4.25 million ($5 million starting in 2021). The rate is a flat 16%. Vermont has no inheritance tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in Vermont.
West Virginia
- State Taxes on Social Security: For 2019, Social Security benefits are taxed to the same extent that they are taxed by the federal government. In 2020, 35% of Social Security benefits taxed by the federal government will be excluded from West Virginia taxable income for single taxpayers with federal adjusted gross income of $50,000 or less ($100,000 or less for joint filers). In 2021, 65% will be excluded for qualifying taxpayers. After 2021, qualifying taxpayers can exclude all Social Security benefits.
- Sales Tax: 6% state levy, municipalities can add up to 1% to that, but the average combined rate is 6.41%.
- Income Tax Range: Low: 3% (on up to $10,000 of taxable income); High: 6.5% (on more than $60,000 of taxable income).
- Property Taxes: In West Virginia, the median property tax rate for homeowners is $590 for every $100,000 of assessed home value.
- Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For details on tax breaks for retirees and state taxes on other retirement income, see the complete guide to taxes on retirees in West Virginia.
