Best States to Retire for Social Security: 38 States That Don't Tax Benefits
Most states exempt Social Security from taxation. Here's the complete list plus analysis of overall tax burden.
Key Takeaways
- 138 states (plus DC) don't tax Social Security benefits at all
- 2Only 12 states tax Social Security, and most have exemptions
- 3No-income-tax states automatically exempt Social Security
- 4Overall tax burden matters more than just Social Security taxation
- 5Consider property tax, sales tax, and cost of living together
- 6Best overall depends on your complete financial picture
The 38 States That Don't Tax Social Security
The majority of states exempt Social Security benefits from state income tax. Here's the complete list.
- 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
- North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania
- South Carolina, South Dakota, Tennessee, Texas, Virginia
- Washington, Wisconsin, Wyoming
Recent Changes
Several states have recently eliminated Social Security taxation, including West Virginia (phasing out by 2026) and Nebraska (phased out 2025). Always verify current year rules.
The 12 States That Tax Social Security (2025)
These states still tax Social Security benefits, though most offer partial exemptions based on income.
| State | Tax Treatment | Exemption Details |
|---|---|---|
| Colorado | Partial | Exempt if 65+, or subtract up to $24,000 if 55-64 |
| Connecticut | Partial | Exempt if AGI under $75k single/$100k married |
| Kansas | Partial | Exempt if AGI under $75,000 |
| Minnesota | Partial | Exempt if income under $78k single/$100k married |
| Missouri | Partial | Exempt if AGI under $85k single/$100k married |
| Montana | Partial | Partially taxed based on income level |
| Nebraska | Phasing out | Fully exempt starting 2025 |
| New Mexico | Partial | Exempt if income under $100k single/$150k married |
| Rhode Island | Partial | Exempt if AGI under $88,950 |
| Utah | Partial | Credit phases out at higher incomes |
| Vermont | Partial | Exempt if income under $50k single/$65k married |
| West Virginia | Phasing out | Fully exempt by 2026 |
The 8 No-Income-Tax States
These states have no personal income tax at all, making them automatically Social Security tax-free.
- New Hampshire taxes dividends/interest only (not wages or SS)
- No income tax doesn't mean no taxes—property and sales taxes vary
- Texas and New Hampshire have high property taxes
- Tennessee and Washington have high sales taxes
| State | Property Tax Rate | Sales Tax | Overall Tax Burden |
|---|---|---|---|
| Alaska | 1.04% | 0% | Very Low |
| Florida | 0.91% | 6%+ | Low |
| Nevada | 0.55% | 6.85%+ | Low |
| South Dakota | 1.08% | 4.5%+ | Low |
| Tennessee | 0.66% | 9.55%+ | Low-Medium |
| Texas | 1.68% | 6.25%+ | Medium |
| Washington | 0.92% | 6.5%+ | Low-Medium |
| Wyoming | 0.55% | 4%+ | Very Low |
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Overall Tax Burden Analysis
Social Security taxation is just one factor. Here's how states compare on total tax burden for retirees.
| State | SS Tax | Other Ret. Income Tax | Property | Sales | Overall Rank |
|---|---|---|---|---|---|
| Wyoming | No | No income tax | Low | Low | #1 |
| Alaska | No | No income tax | Med | None | #2 |
| Nevada | No | No income tax | Low | Med | #3 |
| Florida | No | No income tax | Med | Med | #4 |
| Tennessee | No | No income tax | Low | High | #5 |
| South Dakota | No | No income tax | Med | Low | #6 |
| Delaware | No | Low (exclusion) | Low | None | #7 |
| Pennsylvania | No | Low (exempt) | High | Med | #8 |
Rankings based on Tax Foundation data for retiree tax burden
Best States for Different Retiree Profiles
The "best" state depends on your specific financial situation and priorities.
- High SS, Low Other Income: Wyoming, Alaska, Nevada (no income tax)
- High Pension Income: Pennsylvania (full pension exemption)
- Making Major Purchases: Delaware (no sales tax)
- Government Retiree: NC (Bailey Settlement) or PA (full exemption)
- Want Warm Weather: Florida, Tennessee, Texas, Nevada
- Want Low Overall Cost: Tennessee, Alabama, Mississippi
- Want Quality Healthcare: Florida, Arizona, Pennsylvania
Don't Forget Cost of Living
A state with higher taxes but lower cost of living may leave more money in your pocket than a low-tax, high-cost state. Calculate your total annual budget, not just tax rates.
Federal Taxes Still Apply
Up to 85% of your Social Security benefits may be taxable at the federal level regardless of which state you live in. State tax exemption only eliminates the state portion. Federal taxation depends on your provisional income.
Relocating for Tax Savings? Protect Your Windfall
Selling your home to move to a tax-friendly state often creates a significant cash windfall. A Gold IRA can help protect this money in a tax-advantaged way.
- Rollover retirement accounts tax-free when you move
- Physical gold is tax-free in most no-income-tax states
- Hedge against inflation eating your fixed SS income
- Diversification beyond paper assets and real estate
- No state tax on Gold IRA growth in tax-free states
Frequently Asked Questions
1What states don't tax Social Security at all?
38 states plus DC don't tax Social Security benefits. This includes the 8 no-income-tax states (AK, FL, NV, SD, TN, TX, WA, WY) plus 30 states that specifically exempt Social Security from their income tax.
2Which state is best for retirees on Social Security?
It depends on your complete financial picture. For Social Security-only income, Wyoming, Alaska, and Nevada offer very low overall tax burden. For warm weather, Florida and Tennessee are popular. For comprehensive pension exemptions, Pennsylvania is hard to beat.
3Are Social Security benefits taxed federally?
Yes, up to 85% of Social Security benefits can be taxable at the federal level depending on your provisional income (AGI + non-taxable interest + half of SS benefits). State exemption doesn't affect federal taxation.
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