The majority of Social Security claimants have not had to worry about paying state income taxes on their benefits, even though benefits are taxable at the federal level. That will still be the case in 2024, however, some states will impose state taxes on Social Security benefits on their citizens.
The following 11 states will likely continue to tax Social Security benefits in 2024: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. These states will also likely tax benefits in 2023. You should be aware that the taxes you pay will vary depending on the state.
States Taxing Social Security Benefits
Connecticut: In Connecticut, retirees can deduct most or all of their benefit income if their yearly adjusted gross income is greater than $75,000 for single taxpayers and $100,000 for joint filers. 75% of Social Security benefit payments can still be withheld from the income of those who earn more than these criteria. Kansas: Regardless of your filing status, you are exempt from paying state taxes on your benefits if your AGI is $75,000 or less.
Missouri: While Social Security taxes are levied in Missouri, individuals with an annual gross income (AGI) of less than $85,000 (for single filers/heads of household) or $100,000 (for joint filers) are exempt from paying the taxes.
Montana: Social Security is taxable for many retirees in Montana. However, the entire amount of Social Security retirement income can be deductible by taxpayers making less than $25,000 (or $32,000 for joint filers) annually. Social Security benefits will be subject to Montana taxes beginning in 2024, in line with federal laws.
Nebraska: AGI-based sliding scale taxes apply to Social Security benefits in the Cornhusker State. State tax on benefits is not due to those whose income is less than $59,100 (married couple) or $44,460 (individual). By 2025, the state plans to phase down the income tax on benefits.
New Mexico: In 2023, New Mexico will phase away taxes on Social Security benefits for single people earning less than $100,000 annually and married couples filing jointly making less than $150,000. Rhode Island: If you have attained FRA and your AGI is less than $86,350 (for single filers/head of household) or $107,950 (for joint filers), you are not required to pay Social Security taxes in Rhode Island.
Vermont: State taxes on benefits are exempt from single filers with an AGI of $50,000 or less. For those who earn between $50,000 and $60,000, there is a partial exemption available. The full exemption is available to joint filers with earnings of $65,000 or less, and the half exemption is available to those with incomes between $65,000 and $75,000.
Utah: The Beehive State has enacted an income-based tax credit program to deduct Social Security income for individuals filing alone who make less than $30,000 and for couples filing jointly who make less than $50,000 annually. Even individuals who make more than those limits are still eligible for a partial benefit exemption. For every dollar above the aforementioned income criteria, the tax credit is lowered by 25 cents.
