41 States That Don't Tax Social Security Benefits

Key Points

• You may have to pay federal taxes on Social Security benefits, but most states provide an exemption.

• The IRS uses your combined income to help determine the federal taxes you may owe on those benefits.

• A new bill will provide some Social Security recipients with a tax deduction of between $6,000 and $12,000.

• The $23,760 Social Security bonus most retirees completely overlook ›

Taxes are virtually impossible to avoid in modern American life. There are taxes on income, purchases, property, and even Social Security benefits. Paying taxes doesn't necessarily leave people smiling from ear to ear, but they're a necessity for funding essential public services and programs -- including Social Security.

Social Security is a much-needed financial safety net for millions of Americans in retirement, but at the end of the day, it's still income. And any time income is involved, so is the Internal Revenue Service (IRS).

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The good news is that most Social Security recipients are off the hook when it comes to state Social Security taxes because 41 states have done away with them.

Image source: Getty Images.

What states don't tax Social Security benefits?

Below are the 41 states (along with Washington, D.C.) that currently do not tax Social Security benefits:

1. Alabama
2. Alaska
3. Arizona
4. Arkansas
5. California
6. Delaware
7. Florida
8. Georgia
9. Hawaii
10. Idaho
11. Illinois
12. Indiana
13. Iowa
14. Kansas
15. Kentucky
16. Louisiana
17. Maine
18. Maryland
19. Massachusetts
20. Michigan
21. Mississippi
22. Missouri
23. Nebraska
24. Nevada
25. New Hampshire
26. New Jersey
27. New York
28. North Carolina
29. North Dakota
30. Ohio
31. Oklahoma
32. Oregon
33. Pennsylvania
34. South Carolina
35. South Dakota
36. Tennessee
37. Texas
38. Virginia
39. Washington
40. Wisconsin
41. Wyoming

States have been progressively eliminating their Social Security taxes, so even if you're in one of the nine states that still currently tax benefits, that might not always be the case.

Federal tax rules apply regardless of state rules

Regardless of what your state's specific tax rules are regarding Social Security, federal tax rules apply to every Social Security recipient. Luckily, most people won't have to worry about paying anything. However, "most" means that there are some who will.

To determine if you'll be subjected to federal taxes on your Social Security benefits, the IRS uses your combined income. This number includes your adjusted gross income (AGI), half of your annual Social Security benefit, and any nontaxable interest (such as from specific bonds).

For example, if your AGI is $20,000, you receive $24,000 annually from Social Security, and you have $500 in nontaxable interest, your combined income would be $32,500 ($20,000 $12,000 $500).

Once the IRS knows your combined income, the following ranges are used to determine how much of your benefits are eligible to be taxed:

Data source: IRS.

The portion of your benefits eligible to be taxed will be added to your other income and then taxed at your typical income tax rate. For instance, if you receive $24,000 annually in benefits and 50% is eligible to be taxed, $12,000 would be added to your other income and then taxed normally.

Some recipients may have a small tax bill starting this year

President Trump's "big, beautiful bill" included a provision that provides a temporary tax deduction for eligible individuals age 65 and older. The deduction is $6,000 for single filers and $12,000 for couples filing jointly.

To qualify for the full $6,000 deduction, single filers must have a modified adjusted gross income (MAGI) below $75,000, and couples must have a MAGI below $150,000.

Single filers with a MAGI between $75,000 and $175,000 and couples with a MAGI between $150,000 and $250,000 are eligible for a reduced deduction, with the amount depending on where their income falls in the range. If you earn above those levels, you aren't eligible for any deduction.

This deduction is set to remain in place until 2028 and is available even if you take the standard deduction (which typically prohibits you from itemizing your deductions).

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