Paying our taxes is not always a pleasant experience, and the fact is that in the United States many citizens live on just one Social Security check and losing part of their taxes can be very bad news. That is why it is so important to know all the details related to taxes and whether or not we will have to pay the IRS something from our retirement check.
While it is true that federal taxes are always there, it is also true that some specific states collect state taxes from citizens collecting a Social Security check. In this way we could lose part of our monthly benefits in this, but it is true that not all beneficiaries living within these states have to pay more taxes.
Be that as it may, if you live on a Social Security check as your only source of income, you may not have to pay state taxes in these 9 states, but it all depends on your total income. So doing a quick check to see if this is the case could save you penalties and fines from the IRS.
States in which Social Security taxes are payable
It is true that, first and foremost, we must bear in mind that Social Security beneficiaries do not usually receive an excessively large benefit. For that reason, it is possible that even if we live in the following states, we will not have to pay part of our monthly check.
Just in case, the states that collect taxes from certain Americans with a Social Security check are:
- Colorado. In 2024, Colorado allows people over the age of 65 to subtract the total amount of Social Security benefits taxed at the federal level from their state taxable income, as long as their AGI does not exceed $75,000 (single) or $95,000 (married couples). From 2025, this deduction will be extended to those over 55, maintaining the same income limits.
- Connecticut. If the AGI is less than $100,000 for couples or $75,000 for other categories, this state does not collect Social Security taxes. Anything above that figure may be subject to tax.
- Minnesota. Minnesota, like Colorado, partially or totally excludes Social Security benefits subject to federal taxes from state taxes.
- Montana. Montana applies the same rules as the federal government for taxing Social Security benefits, based on provisional income, which includes AGI, non-taxable interest from municipal bonds and half of annual Social Security benefits.
- New Mexico. In New Mexico, Social Security benefits are exempt from state taxes if income does not exceed $100,000 for single filers. Married couples, heads of household and widowers qualify with incomes up to $150,000, while couples filing separately must have $75,000 or less to obtain the exemption.
- Rhode Island. Rhode Island allows up to $20,000 per person (or $40,000 for married couples) of Social Security benefits to be exempted from state taxes if two requirements are met. First, you must have reached your full retirement age (FRA), which varies between 65 and 67 depending on your year of birth. In addition, your federal AGI must be within certain limits: $101,000 or less for singles and heads of household, $126,150 or less for married couples and qualified widowers, and $101,025 or less for couples filing separately.
- Utah. Utah taxes Social Security benefits, but offers a tax credit to reduce the tax burden, the amount of which varies according to the taxpayer’s marital status and MAGI. You can calculate it with a specific worksheet. Recently, there have been attempts in the state government to eliminate this tax, although it is not yet clear whether they will succeed, which could benefit retirees in the future.
- Vermont. In Vermont, all Social Security benefits are exempt from state taxes for those with an Adjusted Gross Income (AGI) of less than $65,000 for married couples filing jointly, and $50,000 for all other marital statuses. A partial credit is also available for married couples with an AGI between $65,001 and $74,999, and for other taxpayers with an AGI between $50,001 and $59,999.
- West Virginia. West Virginia does not tax Social Security benefits for individuals with an AGI of $50,000 or less, or $100,000 or less for joint returns. For the 2024 tax year, the state will also exempt 35% of benefits for those above these limits. This percentage will increase to 65% in 2025, before the state completely eliminates the tax on Social Security benefits in 2026 and beyond.
If you have any questions in this regard, it is always advisable to go to one of the IRS offices or ask within Social Security, as they will be able to help you solve problems related to your taxes and your retirement check.