26 States That Do Not Tax Your Social Security Benefits

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Choosing the most suitable place for you to live your golden years as comfortable and as pleasant as possible is not easy. You need to factor in a lot of things, from how close or far it is from your family to climate, amenities and most importantly taxes. Some states offer certain deductions on some of your retirement income while others do not levy income taxes at all, which means you get to keep your entire retirement income.

The following 26 states either have no income tax or exempt certain forms of retirement income, including Social Security benefits, according to a report issued by the Tax Foundation. First, we’ve listed the states that, starting with 2020, provide a full exemption of the Social Security benefits from taxation from all residents’ income taxes and continued with the states that levy no income tax whatsoever. Is your state on the list?

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  1. California

According to the Federation of Tax Administrators, social security is not taxed in California at state level. However, Californians with a taxable income of up to $1 million do have to pay individual income tax rates between 1% and 12.3%. Those with a taxable income exceeding the $1 million threshold, are taxed an additional 1 percent, in which case the state’s maximum tax rate becomes 13.3%.

If you’re thinking of spending your golden years in the Golden State, here are 10 Ways To Make the Most Out of Life as a Retiree.

 

  1. Indiana

When it comes to the personal income tax, Indiana levies a 3.23 percent. The good news is there’s no tax for Social Security benefits. Future Indiana retirees will also be glad to find out that the Hosier State has been named the fifth-most affordable state for homebuyers, according to a 2020 SmartAsset analysis.

“The Hoosier State has the second-lowest average closing costs in the study, at $2,627. Indiana also is tied for the fifth-lowest median listing price per square foot, at $108. It has the seventh-lowest median listing price overall, at $186,000,” as explained in SmartAsset’s “The 10 Most Affordable States to Buy a Home“.

 

  1. Iowa

Iowa is among the moderate tax-friendly states. Residents in Iowa have to pay personal income tax rates ranging from 0.33% to 8.53%. However, Social Security benefits are exempt from the Hawkeye State’s income tax, with those receiving such benefits having a full state income tax protection. You might also like: 14 States Where Your Pension Won’t Get Taxed.

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9 thoughts on “26 States That Do Not Tax Your Social Security Benefits”

  1. Janice E. Prescott

    I think it’s double taxation. First we pay when we make the money, then we pay when we receive what we have paid into, and already been taxed on. I really don’t understand this process. The checks are so small anyway, but take out the God awful taxes, and you could almost make it on what you get. Don’t understand.

      1. Don, I lived in Massachusetts for a long time, and when I retired with my state pension, my Social Security was prorated on my pension and drastically cut, thanks, as you say, to Ronald Reagan.. I get a net check of $373/month. It’s been the same amount for five years, since my Medicare costs rise every year. It angers me greatly to think about this! Legislation to correct this abomination has lingered in Congress for years!

  2. Verle R Eggleston

    Oklahoma also does not tax Social Security. The taxable portion of Social Security on the federal return is taken as a deduction in arriving at Oklahoma taxable income.

  3. Daniel D MacIsaac

    Used to think we lived in the best country in the world. Its sad to see so few impose their will on so many. At one time I could proclaim “this really is a wonderful place to live and bring up a family” without being canceled.
    Its like we can never do enough, as though we have not made significant gains in the past several decades.
    I fell like the abused child or spouse who keeps getting kicked no matter how hard they try.
    Its very difficult staying positive and moving forward with a positive attitude when you are considered enemy number 1 by 50% of the population. All we want is to be left alone to live our lives the way we see fit.
    Not looking for gratitude or validation just peace.

  4. 2
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    There are many more states than listed above that do not tax Social Security benefits as income. In fact, there are only 13 states that do consider Social Security benefits as taxable income.

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