10 Tax-Free States for Social Security Income

When planning for retirement, it’s important to consider the impact of taxes on your income. One of the key sources of income for many retirees is Social Security. While the federal government may tax up to 85% of your Social Security benefits depending on your income level, many states exempt Social Security from taxation altogether. If you’re considering a move in retirement, or simply want to understand how your current location impacts your tax burden, it’s important to know which states offer this benefit. Here are the 10 states that do not tax Social Security income.

1. Alabama

Alabama is one of the states that does not tax Social Security benefits. In addition to this, it also provides tax breaks for pensions and does not tax military retirement pay.

2. Alaska

Alaska is a tax-friendly state for retirees as it does not have a state income tax. This means that not only Social Security benefits but all other types of retirement income are tax-free as well.

3. Florida

Florida is another state that does not tax Social Security benefits. It also has no state income tax, making it a popular destination for retirees.

4. Nevada

Nevada does not tax Social Security benefits and also has no state income tax. This makes it a tax-friendly state for retirees.

5. South Dakota

South Dakota is one of the few states that does not tax Social Security benefits or other types of income, as it has no state income tax.

6. Texas

Texas is a tax-friendly state for retirees as it does not tax Social Security benefits or other types of retirement income due to the absence of a state income tax.

7. Washington

Washington state does not tax Social Security benefits and has no state income tax. This makes it a good option for retirees looking for a tax-friendly state.

8. Wyoming

Wyoming is another state that does not tax Social Security benefits. It also has no state income tax, making it a tax-friendly state for retirees.

9. New Hampshire

New Hampshire does not tax Social Security benefits or other retirement income. However, it does have a 5% tax on dividends and interest in excess of ,400 for individuals and ,800 for joint filers.

10. Tennessee

Tennessee does not tax Social Security benefits and it also has no state income tax. However, it does tax dividends and interest, although these taxes are set to be phased out by 2021.

In conclusion, there are several states that do not tax Social Security benefits, which can be a significant advantage for retirees. However, it’s important to consider all aspects of a state’s tax system when planning for retirement, as other taxes such as sales and property taxes can also have a significant impact on your cost of living.