States That Don’t Tax Social Security Benefits

The federal government taxes up to 85% of social security benefits depending on your income. However, 37 states and Washington D.C. provide tax exemptions for Social Security.

Keep in mind this list doesn’t necessarily mean these states are the most tax friendly or best states to retire as some states still have other state income taxes, sales tax or 401(k) or pension taxes. Plus, there are states with high property taxes that can impact your bank account.

Below we list out the states that do and don’t tax Social Security benefits including dependent, survivor, SSI and SSDI benefits.

Find out if if there will be a Social Security increase next year with the COLA increase watch.

37 States That Don’t Tax Social Security Benefits And Washington D.C.

The following states don’t tax social security benefits. Some states do tax state income tax but don’t tax social security and others simply do not collect any state income tax:

• Alabama
• Alaska (no state-income tax)
• Arizona
• Arkansas
• California
• Delaware
• Florida (no state-income tax)
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Nevada (no state-income tax)
• New Hampshire (no state-income tax, dividend and interest taxes only)
• New Jersey
• New York
• North Carolina
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• South Dakota (no state-income tax)
• Tennessee (no state-income tax, dividend and interest taxes only)
• Texas (no state-income tax)
• Virginia
• Washington (no state-income tax)
• Wisconsin
• Wyoming (no state-income tax)
• Washington D.C.

13 States Which Tax Social Security Benefits or Partially

Some states reduce the level of taxation applied to Social Security benefits depending on things like age or income level:

• Colorado: Excludes any taxpayer with an adjusted gross income (AGI) less than $75,000 (single filers) or $100,000 (filing jointly).
• Connecticut.
• Kansas: Excludes any taxpayer with an AGI less than $75,000 regardless of filing status.
• Minnesota: Starts with a graduated system with income below $81,180 (single filer) or $103,930 (filing jointly).
• Missouri: Allows a 100% exemption as long as the taxpayer is 62 or older and has less than an AGI of $85,000 (single filer) or $100,000 (filing jointly) in annual income.
• Montana: Starts with a graduated system with income below $36,420 (single filer); Once income exceeds $36,420, 85 percent of Social Security benefits will be taxed.
• Nebraska
• New Mexico: Low-income taxpayers 65 and older may exempt up to $8,000 of income and gradually phases out at $28,500 (single filer) or $51,000 (filing jointly). All income is exempt for taxpayers who are 100 or older.
• North Dakota: Taxpayers can deduct taxable Social Security benefits if their AGI is less than $50,000 (single filer) or $100,000 (filing jointly).
• Rhode Island: Taxpayers receive a modification who have reached full retirement age as defined by the SSA and have a federal AGI of under $81,900 (single filer) or $102,400 (filing jointly).
• Vermont: Starts with a graduated system with income below $34,000 (single filer) or $44,000 (filing jointly).
• West Virginia: Sstarts with a graduated system with income below $50,000 (single filer) or $100,000 (filing jointly) the tax will be eliminated by 65 percent; effective 2021 there will be no social security tax for those that meet the minimum income levels.

Note: These lists are not an indicator of being the most tax-friendly states as there are other factors to consider such as property taxes and how pension withdrawals are taxed.

States Where Pensions Aren’t Taxed

Alaska , Florida , Illinois , Mississippi , Nevada , New Hampshire , Pennsylvania , South Dakota , Tennessee , Texas , Washington, and Wyoming. 

Limited Taxes on Pensions: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, South Carolina, Utah, Virginia, and Wisconsin.

Quick Facts

Alaska and New Hampshire are the only states with no sales, income or Social Security tax.

Alaska also pays a dividend each year from the Alaska Permanent Fund (PFD) and in 2019 it was $1,606 per resident.

Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming have sales taxes but no state income, Social Security or pension income tax.

Delaware, Montana and Oregon do not have a sales tax. Hawaii has the lowest Sales Tax.

Alabama, Arkansas, Louisiana, Tennessee and Washington have the highest state sales tax (not including local and city taxes).

For the above states you may be eligible for disability-related income (SSDI, SSI) deductions or credits. Federally Adjusted Gross Income (AGI) may also exempt some or all of a recipients taxable portion.

If you live in a U.S. territory (American Samoa, Guam, Northern Marianas Islands, Puerto Rico, U.S. Virgin Islands) or possess and receive Social Security benefits, your benefits may be taxable. (in addition to any U.S. federal income tax liability.)

These States Don’t Tax Social Security and Don’t Tax Military Retirement Pay

• Alabama (no state income tax)
• Alaska
• Arkansas
• Florida (no state income tax)
• Hawaii
• Illinois
• Iowa
• Louisiana
• Maine
• Massachusetts
• Michigan
• Mississippi
• Nevada (no state income tax)
• New Hampshire (no state income tax, dividend and interest taxes only)
• New Jersey
• New York
• Ohio
• Pennsylvania
• South Dakota (no state income tax)
• Tennessee (no state income tax, dividend and interest taxes only but will be phased out in 2021)
• Texas (no state income tax)
• Washington (no state income tax)
• Wisconsin
• Wyoming (no state income tax)

These States Don’t Tax Social Security but do tax a portion of military retirement pay or a have other special provisions

• Arizona
• Delaware
• Georgia
• Idaho
• Indiana
• Kentucky
• Maryland
• North Carolina
• Oklahoma
• Oregon
• South Carolina
• Washington D.C.

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