Will Your Retirement State Tax Your Social Security?

It doesn’t seem right that anyone should have to pay income tax on Social Security retirement benefits, at least until the benefits paid exceed the amount of money that the recipient paid into the system over the years. But, this ship has sailed and many of us will be taxed on Social Security income. The question for today is whether you might get hit with a double tax whammy – taxed at both the federal and state levels.

Federal income taxation of Social Security income is relatively straightforward. It all depends on how much other taxable income you have.

For individual filers, if your income (including Social Security) is between $25,000 and $34,000, you may have to pay tax on up to 50 percent of your benefits. If your combined income is greater than $34,000,  up to 85 percent of your benefits may be taxable.

For joint filers, if you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay tax on up to 50 percent of your benefits. If your joint income is more than $44,000, up to 85 percent of your benefits may be taxable.

What about state income tax? Fortunately, only 14 states tax Social Security retirement benefits at all. Of those 14 states, six tax Social Security income in the same manner as the IRS. The remaining 8 states provide some sort of preferential tax treatment for Social Security income.

I plan on remaining in Tennessee for my primary retirement residence. Tennessee is one of the 36 states that keep their tax claws off your Social Security income.  I don’t think that will change in my lifetime. Several attempts to create a general state income tax here have been met with aggressive citizen protests and defeats at the ballot box.

What about your retirement destination? Here is a link to a map that visually shows you how the different states tax Social Security income. It’s always something to consider when you are working on your retirement plan.


  1. Doris says

    I left New Jersey 28 years ago and transferred in my government job to North Carolina , from which I retired in 2009. I am also fortunate to be living in this state as my version of a 401K, the Thrift Savings Plan, is free from NC state tax as I come under a special provision known as the Bailey decision which excludes me from the income tax. You had to be in service five years before August 12,1989 and I was hired in 1984, which exempts me. Of course, when I get ready to withdraw the funds (I have not had to do this yet and waiting until age 70 1/2) I am still liable for the Federal tax rate that is imposed. I would never take this money out of the TSP to roll over to a IRA as the exemption would be lost to me.

  2. Joan Zaniskey says

    Recently married and over 65. As a single at my current income level did not pay any Federal income tax. Now that I married I have to pay tax on on what the IRS considers my “combined income” which is some convoluted method they use to determine your adjusted gross income on which your tax rate is based. My meager social security benefit is now taxed at 85% This is discriminatory and therefore illegal. What is wrong with all the married people in the country? Don’t they realize they are getting the royal swindle from their government? And what does AARP have to say to them on behalf of their membership? So far a big fat zero.

Leave a Reply

Your email address will not be published. Required fields are marked *