Living in One of These 42 States? You're in Luck When It Comes to Social Security.
Key Points
Many retirees might not know that their Social Security benefits may be subject to taxes.
You could owe federal taxes on Social Security benefits, even if your state doesn't tax them.
How much you could pay in federal taxes is based on your "combined income."
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People often consider factors such as weather and proximity to family when deciding where to retire, but taxes should be added to the list. Most retirees expect to pay various taxes and know that their 401(k) withdrawals are taxed, but far fewer may realize that their Social Security benefits can also be taxed.
Even after spending decades paying into the Social Security system via taxes, there's a chance the IRS will dip into your benefits on the back end. Luckily, most people can avoid this -- at least, at the state level -- thanks to their states' tax laws.
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Which states don't tax Social Security?
Here are the 42 states (plus Washington, D.C.) that don't have a Social Security tax:
- 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
- West Virginia
- Wisconsin
- Wyoming
The most recent members on this list are West Virginia (2026), Kansas (2024), Missouri (2024), Nebraska (2024), and North Dakota (2021). Eliminating their Social Security tax is a way for states to incentivize retirees to stay or move there. In return, the state gets more people spending money and paying other forms of taxes.
You still have to answer to Uncle Sam
Unfortunately, not having Social Security tax in your state doesn't mean you're off the hook. Federal tax rules still apply. To determine how much, the IRS looks at your "combined income," which is the total of half your annual Social Security, adjusted gross income (AGI), and any nontaxable interest earned.
For instance, if someone's annual Social Security benefit was $24,000, their AGI was $20,000, and they had $1,000 in nontaxable interest, their combined income would be $33,000 ($12,000 + $20,000 + $1,000).
After determining your combined income, here's how the IRS determines how much of your benefits are eligible to be taxed.
| Percentage of Taxable Benefits Added to Income | Filing Single | Married, Filing Jointly |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | $25,000 to $34,000 | $32,000 to $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Data source: IRS.
If the person in our example were single, they could have up to 50% of their Social Security taxed. In this case, up to $12,000 could be added to their other earnings and then taxed at their typical income tax rate.
Most people will also be able to avoid federal taxes on their benefits.
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