When it comes to social security benefits, you may be confused about whether or not they are taxed. The reason for this confusion is pretty clear too: there isn’t one law that applies to all states. Instead, how or if they’re taxed depends on where you live and the applicable laws.
No Income Tax
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Alaska
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Florida
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Nevada
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South Dakota
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Texas
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Washington
● Wyoming
And, even in states that do have income tax, some do not include social security benefits as taxable income. States on this list are:
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Alabama
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Arkansas
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California
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DC
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Hawaii
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Indiana
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Iowa
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Kentucky
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Louisiana
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Maine
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Maryland
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Michigan
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Mississippi
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New Hampshire
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New Jersey
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North Carolina
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Oregon
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Pennsylvania
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Tennessee
● Wisconsin
Federal Tax Laws
So, what if you’re not in one of the above states? Well, there are still further breakdowns.
Two states- Nebraska and Utah- actually tax social security benefits based on the federal laws that are in place. This means that only a portion of your social security income is taxable, and the amount depends on your filing status and your combined income, which is made up of your adjusted gross income, nontaxable interest, and half of your benefits.
Exemption
To make matters even more complicated, some states actually exempt any benefits that are federally taxable. This law applies to:
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Arizona
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Colorado
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Delaware
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Georgia
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Idaho
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Illinois
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Massachusetts
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New York
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Ohio
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Oklahoma
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South Carolina
● Virginia
Still feeling
confused about what your state does in terms of social security benefits? Well,
other states have special laws all their own. Even if your state was mentioned
above, though, you may be unclear on what, exactly, these laws mean for you. If
you’re still feeling unsure, remember that you can always address these issues
and more with a tax professional.
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