Income is the crucial retirement preparation phase, and Social Security is the most significant payout source for retirees. If you’re waiting for your golden years, it’s wise to take a record of your cash requirements and origins of income.
That preparation will help you plan the best period to take Social Security benefits, how to settle down your 401(k) or IRA, and how to structure your annuity payouts.
You need to know the tax assumptions of any retirement benefits choices you make, so it’s necessary to decide how your country taxes Social Security.
Some retirees are shocked to see that the federal rules, in particular situations, taxes Social Security benefits. It is still more shocking that appropriate individual states further apply their income tax to Social Security payouts.
Luckily, not several states come into this class. Also, those who tax Social Security usually give certain exceptions or methods to decrease or eliminate the tax, usually based on age or income.
Here’s a list of the states that send taxFree social security payments.
The U.S. States that Sends TaxFree Social Security Payments
- Louisiana
- Alabama
- Arkansas
- Delaware
- Alaska (no state income tax)
- Hawaii
- Idaho
- Florida (no state income tax)
- Indiana
- California
- Iowa
- Georgia
- North Carolina
- Maine
- Illinois
- New Hampshire (no state income tax)
- Maryland
- New Jersey
- Arizona
- Kentucky
- Michigan
- Mississippi
- Nevada (no state income tax)
- Massachusetts
- Washington (no state income tax)
- Oregon
- New York
- Tennessee (dividend and interest taxes only)
- Ohio
- Wyoming (no state income tax)
- South Carolina
- Washington D.C.
- Wisconsin
- South Dakota (no state income tax)
- Texas (no state income tax)
- Oklahoma
- Virginia
- Pennsylvania
States That Do Tax Social Security Benefits or Partially
Some states decrease the level of tax referred to Social Security benefits based on factors such as age or income:
- Nebraska
- Colorado
- Rhode Island
- Kansas
- Missouri
- North Dakota
- Montana
- Connecticut
- New Mexico
- Vermont
- Minnesota
- West Virginia
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