38 States in the US That Do Not Tax Social Security
For decades, Social Security benefits have been under fire for being grossly inadequate. When combined with inflation, these benefits alone cannot ensure a comfortable retirement. An additional tax on these benefits can further reduce their value by a great margin. This can be a complete game-changer for retirees who bank on their Social Security benefits for most of their retirement needs and may even result in a compromised standard of living. Consider consulting with a professional financial advisor who can guide you through the intricacies of Social Security benefits, helping you maximize your savings while minimizing your taxes at the same time.
Regardless of whether Social Security constitutes a major chunk of your retirement corpus or is just a cherry on the cake, here are some things you should know about how it is taxed.
Is Social Security tax federal or state?
Social Security benefits are taxed at the federal level depending on the amount and sources of your income. As per the prevailing tax laws, if your gross income is between $25,000 and $34,000, up to 50% of your total benefits may be taxed. Further, if your gross income exceeds $34,000, you can be taxed on up to 85% of your benefits.
Do you pay state taxes on Social Security benefits?
If you are wondering, “are state taxes taken out of Social Security”, the answer to this question depends upon the state you live in. 13 states namely, Connecticut, Colorado, Kansas, Minnesota, Montana, Missouri, Nebraska, New Mexico, North Dakota, Rhode Islan
