A portion of Social Security retirement, disability and other benefits are subject to federal income tax if your overall income exceeds a cap the U.S. government sets. Thirteen states also tax some or all of their residents’ Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.
State policies on taxing benefits vary widely. Some follow the federal rules for determining how much of a beneficiary’s Social Security income is taxable: none for people with incomes below $25,000 for a single filer and $32,000 for a couple filing jointly, 50 percent to 85 percent at higher income levels.
Other states offer their own deductions or exemptions based on age or income, and a few are reducing or eliminating taxation of benefits. Here’s what to expect if you live in a state that taxes Social Security.
Benefit income is taxable at the state’s flat rate of 4.55 percent. Coloradans, however, can deduct up to $20,000 in retirement income, including Social Security payments, if they are between the ages of 55 and 64 and up to $24,000 if they are 65 or older. Both spouses in a married couple can take the deduction.
Starting with the 2022 tax year, residents will be able to deduct all federally taxable Social Security benefits from their state income, part of a tax-code overhaul that Colorado lawmakers enacted in June 2021. For more information, contact the Colorado Department of Revenue.
State residents can deduct most or all of their benefit income, depending on their adjusted gross income (AGI), the figure on line 11 of the IRS 1040 form.
Single beneficiaries who report an AGI of less than $75,000 and married couples whose AGI is below $100,000 pay no state taxes on their benefits. If your income exceeds those thresholds, 75 percent of your Social Security benefits are tax-exempt.
Connecticut’s income-tax rate ranges from 3 percent to 6.99 percent. For more information, contact the Connecticut Department of Revenue Services.
Kansans whose AGI is $75,000 or less are fully exempt from paying state taxes on Social Security. The cap applies for all filing statuses. Beyond that threshold, benefits are taxed at the same rate as other income, which in Kansas ranges from 3.1 percent to 5.7 percent.
For more information, contact the Kansas Department of Revenue.
Minnesota follows the federal rules for determining the amount of Social Security benefits that are subject to income tax.
For those who owe taxes on their benefits, a state policy called the Social Security Subtraction offers a partial deduction. In 2021 single filers can exclude up to $4,130 of their federally taxable benefits from their Minnesota income. The maximum subtraction for married couples is $5,290. The subtraction is phased out for those with higher incomes, starting at $80,270 for married joint filers and $62,710 for singles.
For more information, contact the Minnesota Department of Revenue.
Social Security benefits are fully deductible for Missouri residents age 62 and older with an AGI of less than $85,000 (single) or $100,000 (married, filing jointly). If you earn more, you may still be eligible for a partial deduction.
Missouri’s income-tax rates range from 0 percent to 5.4 percent. For more information, contact the Missouri Department of Revenue.
Like the federal government, Montana does not tax Social Security for people with overall incomes of less than $25,000 for a single filer and $32,000 for a couple filing jointly. Residents who make more are liable for tax on their benefits, but the state uses a different method than the feds to determine the taxable amount. The state tax form includes a worksheet for calculating the difference.
Montana’s income-tax rates range from 1 percent to 6.9 percent. For more information, contact the Montana Department of Revenue.
Nebraska does not tax Social Security benefits for couples filing jointly with an AGI below $59,100 and for singles with an AGI below $44,460. Above those levels, a portion of benefits are taxable.
Nebraska, however, is phasing out taxation of benefits under a new state law, starting in the 2021 tax year, when beneficiaries will see a 5 percent cut in taxes on their Social Security. The reduction will grow in steps to 50 percent by 2025, at which point state lawmakers will vote on whether to eliminate the tax on benefits altogether by 2030.
The state taxes income at rates of 2.46 percent to 6.84 percent. For more information, contact the Nebraska Department of Revenue.
The state follows the federal rules for exempting lower-income residents — those with incomes of less than $25,000 for individuals and $32,000 for couples filing jointly — from paying taxes on benefits.
Otherwise, New Mexico treats Social Security benefits the same as it does other income for tax purposes. It does allow people age 65 and older with an AGI of $51,000 or less for married couples and $28,500 or less for singles to deduct up to $8,000 in income, which can be applied to benefits.
New Mexico taxes income at rates from 1.7 percent to 5.9 percent. For more information contact the New Mexico Taxation & Revenue Department.
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North Dakota uses the federal method to determine the taxable amount of Social Security benefits. Single filers with an AGI of $50,000 or less, and married couples filing jointly with an AGI of $100,000 or less, can deduct that portion from their state income.
North Dakota’s income-tax rates are 1.1 percent to 2.9 percent. For more information, contact the North Dakota Office of the State Tax Commissioner.
The state does not tax benefits for people who have reached full retirement age, as defined by the Social Security Administration (currently 66 and 2 months and gradually rising to 67), and have an AGI below $86,350 if their filing status is single or head of household or $107,950 for a couple filing jointly.
Rhode Island taxes income at rates ranging from 3.75 percent to 5.99 percent. For more information, contact the Rhode Island Department of Revenue’s Division of Taxation.
Utah uses the federal formula to calculate how much Social Security income is taxable at the state tax rate, which is 4.95 percent, but as of 2021, the state offers a full or partial credit on those taxable benefits.
Couples reporting income of $50,000 or less and singles making $30,000 or less qualify for a full tax credit on their benefit income. Those earning more can still get a partial break on their benefits, with the tax credit reduced by 25 cents for each dollar above the income thresholds above.
For more information, contact the Utah State Tax Commission.
In Vermont single filers with an AGI of $45,000 or less qualify for a full exemption from paying state taxes on Social Security. Those who make between $45,001 and $54,999 are eligible for a partial exemption.
For married couples filing jointly, the full exemption applies at incomes of $60,000 or less. The exemption is phased out at incomes between $60,001 and $69,999.
For single filers earning at least $55,000 and couples making at least $70,000, benefits are fully taxed at the state rate, which ranges from 3.35 percent to 8.75 percent. For more information, contact the Vermont Agency of Administration’s Department of Taxes.
West Virginia is gradually phasing out state income taxes on Social Security for low- and middle-income residents.
For the 2020 tax year, West Virginians making $50,000 or less ($100,000 for couples filing jointly) were allowed to exclude 35 percent of their Social Security benefits from their taxable state income. The exclusion rises to 65 percent in 2021 and 100 percent in 2022. For people with incomes above those levels, benefits are taxed according to the federal model.
West Virginia’s income-tax rates range from 3 percent to 6.5 percent. For more information, contact the West Virginia State Tax Department.
Keep in mind
None of the above applies to Supplemental Security Income, a monthly benefit for older, blind and disabled people with low incomes that is administered, but not funded, by the Social Security Administration. SSI is not subject to income taxes.
Updated July 22, 2021
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