What About State Taxes on Social Security Benefits?

So far, everything we’ve discussed applies to your federal income tax return. However, your home state may have its own set of rules for taxing retirement income, including Social Security.

The good news is that a majority of states do not tax Social Security benefits at all. They provide a full exemption for this income, regardless of how much other income you have.

However, a handful of states do tax Social Security benefits to some extent. The rules in these states vary widely. Some states start taxing benefits at income levels different from the federal thresholds. Others offer special exemptions or credits for seniors that can offset the tax. Because these laws change, it is not practical to list them all here.

The most important action you can take is to find out the specific rules for your state. The best source of information is your state’s official Department of Revenue or Department of Taxation website. A quick search for “[Your State’s Name] taxes on Social Security” will usually lead you to the right place.

For a helpful directory that can point you to your state’s tax agency, you can visit the USA.gov’s state tax page.