Around one third of Americans expect Social Security will be a major source of their retirement income, according to a 2017 Gallup poll. If you’re going to be reliant on Social Security to fund your lifestyle as a retiree, it’s important you understand exactly how much money you’ll have available to you.
This means not only figuring out what your benefit will be worth depending upon your age at retirement, but also determining if you’ll lose a portion of your Social Security benefits to income taxes.
While the federal government does tax some of your benefits once your income reaches a certain level, the good news is that a lot of Americans live in states that won’t tax Social Security. In fact, there are a total of 37 states where you can enjoy your Social Security benefits without paying state taxes on this important source of income.
Which states don’t tax Social Security benefits?
The 37 states that do not tax Social Security benefits include Alabama, Alaska, Arizona, Arkansas California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, and Wyoming. Washington D.C. also exempts Social Security income from local income taxes .
While some of these states are generally tax-friendly for retirees, others still require seniors to pay a substantial amount of other taxes, including high property and sales taxes. New York, Massachusetts and California, for example, are some of the nation’s highest taxed states.
It’s important to consider all taxes you may have to pay as a retiree — including taxes for property, 401(k) and pension income,…