Clark Howard

26 States That Don’t Tax Social Security Benefits

By Craig Johnson
By Craig Johnson
Many people can’t wait to collect their Social Security benefits. If you’re about to become eligible for Social Security, you may have questions about how that new income will affect your taxes. 

This article is going to show you which states do not tax Social Security benefits according to data from the Tax Foundation, a tax policy nonprofit organization. It recently published a map that shows how each state taxes Social Security benefits.

To verify the Tax Foundation’s data, I researched information for the 26 states (and Washington, D.C.) that don’t tax Social Security income at all:

These 26 States Don’t Tax Social Security Benefits
State Tax Information
Alabama Does not include Social Security as taxable income
Alaska Has no state income tax
Arkansas Does not include Social Security as taxable income
California Does not include Social Security as taxable income
Washington, D.C. Does not include Social Security as taxable income
Florida Has no state income tax
Hawaii Does not include Social Security as taxable income
Indiana Does not include Social Security as taxable income
Iowa Does not include Social Security as taxable income
Kentucky Does not include Social Security as taxable income
Louisiana Does not include Social Security as taxable income
Maine Does not include Social Security as taxable income
Maryland Does not include Social Security as taxable income
Michigan Does not include Social Security as taxable income
Mississippi Does not include Social Security as taxable income
Nevada Has no state income tax
North Carolina Does not include Social Security as taxable income
New Hampshire Does not include Social Security as taxable income
New Jersey Does not include Social Security as taxable income
Oregon Does not include Social Security as taxable income
Pennsylvania Does not include Social Security as taxable income
South Dakota Has no state income tax
Tennessee Does not include Social Security as taxable income
Texas Has no state income tax
Washington Has no state income tax
Wisconsin Does not include Social Security as taxable income
Wyoming Has no state income tax
States not listed in the table above have policies that are less cut and dried: Some partially tax Social Security benefits and others offer state income tax exemptions depending on certain factors.

See the full report from the Tax Foundation here. You'll also see states that exempt the portion of Social Security benefits that are included in federal taxable income.

Conclusion

As you get closer to retirement, you may be wondering when you should start taking your Social Security benefits.

Money expert Clark Howard says if you want to profit more from your money, you'll probably want to delay drawing Social Security.

Clark recently turned 65 years old, and he says he's going to wait a few more years:

"Every year that you wait, you get an additional 8% in your check," he says. "And once you start taking it, every increase is based on the base where you started. So you end up with a lot more money to live on later in life if you wait to take Social Security."

In addition to Clark's advice on how your age affects your Social Security payments, he says you also need to consider your current financial situation and your retirement plans. Here's more about the best time to take your Social Security.

This article was originally published on Clark.com

The post 26 States That Don't Tax Social Security Benefits appeared first on Clark Howard.

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