This article takes a look at the 5 states that tax Social Security in 2024. If you wish to check out our detailed analysis on tax implications and relocation trends, you may go to 10 States That Tax Social Security in 2024.
5. Utah
Insider Monkey Score: 9
Cost of Living Index: 103.2
Tax Friendliness: Moderately Tax Friendly
Utah, a moderately tax friendly state, is also taxing Social Security benefits. However, as a retiree living in the state, you may be able to qualify for a Social Security benefits credit. Retirees can find a Social Security benefits credit worksheet on the state website that they can use to determine how much credit they qualify for. There is also a retirement tax credit of $450 offered, but it is for those who don’t claim the Social Security benefits credit. The cost of living in this state is 3.2% higher than the national average.
4. Minnesota
Insider Monkey Score: 12
Cost of Living Index: 94.1
Tax Friendliness: Not Tax Friendly
While Minnesota still taxes Social Security benefits in 2024, a legislation was passed last year that allows retirees to keep more of their benefits than in the past. From tax year 2023, seniors having a taxable income up to $78,000, or $100,000 for a couple, are exempt from paying state taxes on their benefits. Most other forms of retirement income are also taxed in the state, with certain deductions and subtractions available. Property taxes in the state are close to the national average, while sales tax rate is high. For these reasons, Minnesota is considered as an unfriendly state for retirees in terms of taxes. However, the cost of living in this state is 5.9% lower than the national average.
3. Rhode Island
Insider Monkey Score: 16
Cost of Living Index: 110.7
Tax Friendliness: Not Tax Friendly
Another unfriendly state for retirees in terms of taxes, Rhode Island also taxes Social Security benefits. However, this doesn’t apply to all the retirees in the state. In fact, retirees who have reached the Full Retirement Age (FRA) and meet income requirements don’t have to pay taxes on their Social Security benefits. According to Kiplinger, the most recent threshold for joint filers is that only those with an AGI of $119,750 or more are subject to state tax on Social Security benefits.
2. Connecticut
Insider Monkey Score: 17
Cost of Living Index: 112.8
Tax Friendliness: Not Tax Friendly
Coming in at second place, Connecticut has a high cost of living, and is also an unfriendly state to retire for taxes. Similar to other states, not everyone has to pay taxes on their Social Security benefits in Connecticut. The payment of state income tax on Social Security in this state is dependent on one’s filing status and also their Adjusted Gross Income. Single filers and those married but filing jointly don’t have to have pay tax on benefits if their AGI (Adjusted Gross Income) is below $75,000. For married filing jointly and head of household filers, SS benefits are not taxed with AGI below $100,000.
1. Vermont
Insider Monkey Score: 18
Cost of Living Index: 115.3
Tax Friendliness: Not Tax Friendly
Topping our list of states that tax Social Security in 2024 is the state of Vermont. Vermont does tax SS benefits, but not for all the retirees. Individuals who meet certain income requirements are exempt from taxation on their Social Security benefits. While Kiplinger says that Vermont hasn’t published the most recent guidelines, the latest one states that Social Security benefits in the state won’t be taxed if an individual’s AGI is $65,000 or less. Similarly, those who are single and married filing separately filers qualify for a full exemption with an AGI of $50,000 or less.
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