Although Social Security benefits are subject to tariffs at the federal level, the perception varies when it comes to income taxes. Most citizens with the Social Security benefit have not had to worry about paying state taxes on their benefit income, this will be in most states by 2024.
However, there are exceptions, and some of the beneficiaries, residents of certain states, if they will have to pay Social Security taxes, in 2023 the following 11 states taxed Social Security benefits, it is expected that this 2024 will remain: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah and Vermont. It is important to note that these taxes that beneficiaries must face can be significantly different from one state to another.
Taxes on Social Security Benefits: States That Do It
In the case of Connecticut, retirees with annual adjusted gross income greater than $75,000 for singles and $100,000 for joint filers can make a deduction of most or even all of their income from Social Security benefits. Those with income above these thresholds can still apply for the deduction of at least 75% of Social Security benefit payments.
In the case of Kansas, if your adjusted gross income is reflected in $75,000 or a little less, you do not pay state taxes on the benefits, regardless of your filing status. Missouri, even if taxes are not eliminated from Social Security benefits, the tax does not apply to those with an annual adjusted gross income of less than $85,000 for singles or heads of household, and $100,000 for those filing their taxes together.
In Montana, some retirees can deduct all of their Social Security retirement income if their income is less than $25,000 a year for singles or $32,000 for joint filers. Nebraska operates a sliding scale for taxing Social Security benefits that is based on adjusted gross income. Those with incomes of less than $59,100 for joint filers and $44,460 for singles do not have to pay state taxes on their benefits.
New Mexico, Utah, Vermont, and Other States’ Cases
New Mexico is phasing out taxes on Social Security benefits for those earning less than $100,000 a year. Rhode Island has no Social Security taxes if you completed, your retirement age, and your adjusted gross income.It’s less than $86,350 for singles or heads of household, and $107,950 for joint filers.
In Vermont, single people with an adjusted gross income of $50,000 or less should not pay state taxes on their benefits. Utah is trying to implement an income-based tax credit system to offset Social Security income for single taxpayers who earn less than $30,000 a year and for those who file their taxes together of $50,000.
Those who earn more can still get a partial exemption on their benefits. Let’s emphasize that these income thresholds and policies may vary over time, so it is necessary to be consulting the updated laws and regulations. On the other hand, there are nine states that do not impose state income tax, which means that the inhabitants of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming should not worry about paying state taxes on Social Security benefits in 2024.
That is, the state taxes on the Social Security benefit can be an important factor that retirees and Social Security beneficiaries should take into account when planning their financial situation. It is essential to understand the specific laws and policies that each state has in order to know your fiscal responsibility and make decisions with clear information about your retirement and expenses.
