From 24/7 Wall St. · Maurie Backman · · 1m 20s
8 States Tax Social Security, But Benefits May Still Be Taxed
Your Social Security benefits could be taxed even if you live in a state that doesn't tax them.
In brief
Your Social Security benefits could be taxed even if you live in a state that doesn't tax them. Provisional income calculations determine federal taxes on Social Security, not state residency. Originally reported by 24/7 Wall St..
Quick answers
- Which 8 states tax Social Security?
- Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont tax Social Security benefits.
- What is the key takeaway from 8 States Tax Social Security, But Benefits May Still Be Taxed?
- Provisional income calculations determine federal taxes on Social Security, not state residency.
Which 8 states tax Social Security?
Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont tax Social Security benefits.
You might still owe federal taxes
Even if you live in a state that doesn't tax Social Security, federal taxes apply based on your provisional income.
Provisional income calculation
Your provisional income includes adjusted gross income, tax-exempt interest, and 50% of your Social Security benefits.
Tax thresholds for single filers
If provisional income is between $25,000 and $34,000, up to 50% of Social Security benefits may be taxed.
Tax thresholds for married filers
For married couples, provisional income between $32,000 and $44,000 may tax up to 50% of Social Security benefits.
Tax rates are fixed
Above $34,000 for single filers and $44,000 for married couples, up to 85% of Social Security benefits could be taxed.
Why this matters now
The tax thresholds haven't been adjusted for inflation in decades, potentially costing retirees more than expected.
What matters most
Provisional income calculations determine federal taxes on Social Security, not state residency.
