Were you wondering which states will not tax your Social Security benefits?

When it comes to knowing which states are going to tax your Social Security and which are not, the lines seem to be a bit blurry. This is not because most states ended up keeping this added tax, but rather because, from year to year, more and more states decide to take out the benefits from the amounts that are going to be taxed according to income tax rules.

When considering where to relocate for retirement, it is important to know which states are going to tax your Social Security and which are not, so that you can plan accordingly and not lose part of the money that can make a true difference in your quality of life. This is why we brought to you some of the most surprising states that you probably never considered when it came to them not adding a tax to your Social Security income!

Keep on reading to discover some of the states that will not tax your security!

Do you live in any of these states? Let us know what you love most about them in the comments below!

1. District of Columbia

Since it is more often referred to as Washington, D.C., it is easy to forget that the District of Columbia is one of the states that is not going to tax your Social Security benefits! The state does have an income tax; however, the money that you receive through Social Security is not partly added to the income that is going to be subjected to income tax. So at the level of Washington, D.C., you are definitely not going to have to pay tax on your Social Security benefits.

Everyone else who is not yet retired can expect to pay income tax anywhere between 4% and 8.95%. Yet, the good news is that while DC does have a sales tax of 6%, there is no local added tax on top of it, and if you wish to own property here, the rates are actually some of the lowest in the whole nation!

The District is definitely a place where you will not be able to get bored, as it offers plenty of activities for everyone, and most importantly, you can always visit all the Smithsonian museums free of charge!

2. California

You may have thought that California would be among the states that tax your Social Security, since they seem to have one of the most complicated tax schemes at the state level, with many types of taxes that need to be paid. Yet, the Golden State will not tax your Social Security benefits, as they do not count toward your income taxes. And if you are not yet retired and you decide to move to California, know that the income tax you are going to pay can be anywhere between 1% and 13%! And for those, you may also have additional income taxes imposed by localities.

Property taxes are under the national median, but they surprise when it comes to sales taxes: statewide, the tax percentage sits at 7.25%, but localities will add a bit over 1.5% extra on top of the state rate.

It may seem like California is one of the most expensive states to live in, and while that is true when it comes to big metropolis cities and general hubs, it is not the same in other parts of the state. People love living in this state, as there is always something to do in these parts of the country, and they love the weather!

3. Alabama

If you are worried that Alabama is going to tax your Social Security, you can now set those fears aside. The Yellowhammer State does have an income tax; however, they do not include the income generated through Social Security benefits as part of the taxable income of their residents.

It may happen in other states that you put off moving until you retire because the income tax is too high, but it is not something you have to worry about in Alabama. The statewide tax follows the principle of federal taxes, which abide by a marginal income tax structure. The state taxes will not include the taxes that are included by localities, but otherwise, you can expect an income tax of anywhere between 2% and 5%.

What you should be careful of is the sales tax: while the general state-wide sales tax is only 4%, the localities impose their own additional sales tax, which drives the total tax to a staggering 9%. These are balanced by the low rate when it comes to property taxes (part of the lowest in the whole nation) and by the fact that they do not tax Social Security, which is the prime reason why retirees are considering this state as a relocation destination.

If you want to learn more about taxes and to prevent the tax on income from affecting your retirement, make recommend you to read more about the subject in this book here!

4. Indiana

As opposed to some of the other states on our list, the Hoosier State does have its own state-specific tax system. Yet, the state will not tax your Social Security because they do not consider these earnings that come from benefits to be part of your taxable income.

So if you are considering moving to Indiana, rest assured that this state will not start taxing your social security benefits overnight. Another thing that you should be thankful for is the fact that this state also has a great tax percentage when it comes to any wages you would get, regardless of your age. So if you plan to keep on working in retirement, you will be taxed a flat rate of 3.23% on your income that is subject to taxes. Just keep in mind that localities can add their own taxes as well.

The Hoosier State also has virtually no local-imposed sales taxes, and the general state-wide one is 7%, with property taxes being under the median national average.

When it comes to taxes, Indiana is a great state to consider for relocation, especially since it also has four seasons and affordable housing options!

5. Florida

The Sunshine State has been one of the top spots for retirees over the years, and for good reason: the weather is delightful, depending on the city you relocate into, it is pretty affordable, and there are a lot of retirement communities if you wish to join one, and, most importantly, it will not tax your Social Security income. This is because Florida does not have an income tax, so it would make no sense for them to try to tax your Social Security.

Taxes you should be aware of include the 6 percent sales tax, to which some localities also add about another 1%. If you look at the taxes for properties, they are average when compared to the median average for the whole nation.

The one thing you should definitely keep in mind is the really humid weather, as it could not be the best for you, and that despite the fact that it is a tax-friendly state, especially since they won’t tax your Social Security, hurricane season can be really disruptive, and home insurance prices have skyrocketed in the last few years.

If you plan to mostly or fully rely on your Social Security check come retirement, you should be wary of your state of residence. These 5 states we discussed will not tax your Social Security benefits, but there are a few states that you should exclude if you heavily rely on your check. Read all about the 10 ones you should definitely avoid here!