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13 States That Tax Social Security Benefits

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Are Social Security benefits taxable? You better believe it. Uncle Sam taxes up to 85% of your benefits, depending on your income, and several states tack on a state tax of their own. Vermont, for one, treats Social Security benefits the same way as the feds. Other states tax Social Security benefits only if income exceeds a state-specified threshold. For example, Connecticut taxes Social Security benefits if your income tops $50,000, or $60,000 if you’re married and file taxes jointly.

A tax on Social Security doesn’t necessarily make a state unsuitable for retirement. North Dakota, one of the 13 states that taxes Social Security, actually ranks as a tax-friendly state for retirees. Weigh all state taxes including other income taxes, sales taxes, property taxes, estate taxes and inheritance taxes, not to mention available tax breaks for seniors, to get a complete retirement tax picture.

Take a look at the 13 states that tax Social Security benefits.

SEE ALSO: 50 Best Places to Retire in the U.S.

Kiplinger's state-by-state guide to taxes on retirees is updated annually based on information from state tax departments, Wolters Kluwer Tax & Accounting and the Tax Foundation. All data are for the 2017 tax year unless otherwise noted.

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Colorado

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State Taxes on Social Security: For beneficiaries younger than 65, up to $20,000 of Social Security benefits can be excluded, along with other retirement income. Those 65 and older can exclude benefits and other retirement income up to $24,000. Also, Social Security income not taxed by the federal government is not added back to adjusted gross income for state income tax purposes.

Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.50%.

Income Tax Range: All Colorado residents who have federal taxable income pay a flat rate of 4.63%. Taxpayers are also subject to a state alternative minimum tax.

Property Taxes: The median property tax on Colorado's median home value of $247,800 is $1,489.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Colorado.

SEE ALSO: 10 Most Tax-Friendly States for Retirees

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Connecticut

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State Taxes on Social Security: Social Security is exempt for individual taxpayers with federal adjusted gross income of less than $50,000 and for married taxpayers filing jointly with federal AGI of less than $60,000.

Sales Tax: The state taxes most items at 6.35%, but localities are not allowed to add to that. Jewelry valued at more than $5,000 and clothing, footwear and accessories priced at more than $1,000 per item are taxable at 7.75%.

Income Tax Range: Low: 3% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for those filing individually); High: 6.99% (on the amount over $1 million for married joint filers and over $500,000 for those filing individually); Effective income tax rate: 3.1%/individual, 5%/joint.

Property Taxes: The median property tax on Conneticut's median home value of $270,500 is $5,327.

Inheritance and Estate Taxes: Connecticut imposes an estate tax on the transfer of estates valued at $2 million or more at a progressive rate starting at 7.2%. The rate rises to a maximum of 12% for an estate valued above $10.1 million. There is no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Connecticut.

SEE ALSO: 10 Least Tax-Friendly States for Retirees

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Kansas

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State Taxes on Social Security: Social Security benefits are exempt from Kansas income tax for residents with a federal adjusted gross income of $75,000 or less.

Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.62%. These rates apply to groceries as well. A food sales tax credit of $125 per person is available to seniors, the disabled and those claiming dependent children; to qualify for the credit, federal adjusted gross income may not exceed $30,615.

Income Tax Range: Low: 2.9% (on $15,000 or less of taxable income for single filers and $30,000 or less for joint filers); High: 5.2% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers). For the 2018 tax year, the low rate will rise to 3.1%, and the high rate to 5.7%.

Property Taxes: The median property tax on Kansas' median home value of $132,100 is $1,840.

Inheritance and Estate Taxes: There is no estate tax or inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Kansas.

SEE ALSO: 9 States with No State Income Tax

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Minnesota

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State Taxes on Social Security: Social Security income is taxable, but a married couple can subtract $4,500 of their federally taxable Social Security benefits from their state income. (The break is $3,500 for single and head of household, $2,250 for married separate filers). Make more than $77,000 of income (for married filers) and the break gets phased out, and is gone for those with more than $99,500 of taxable income.

Sales Tax: 6.875% state levy. Localities can add as much as 1.5%, with an average combined rate of 7.30%. Most clothing and footwear are exempt.

Income Tax Range: Low: 5.35% (on less than $25,390 of taxable income for single filers and on less than $37,110 for joint filers); High: 9.85% (on more than $155,911 of taxable income for single filers and on more than $261,510 for joint filers); Effective income tax rate: 5.8%/individual, 6.6%/joint.

Property Taxes: The median property tax on Minnesota's median home value of $188,300 is $2,148.

Inheritance and Estate Taxes: Minnesota has no inheritance tax. But it does have an estate tax, though it has been easing its burden. Midyear in 2017, the state raised the 2017 exemption to $2.1 million, rising to $2.4 million in 2018, $2.7 million in 2019, and $3.0 million in 2020. Rates range from 12% to 16%, with the bottom rate increasing to 13% in 2018.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Minnesota.

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Missouri

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State Taxes on Social Security: Social Security benefits are not taxed for single taxpayers with adjusted gross income of less than $85,000 and married couples with AGI of less than $100,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.

Sales Tax: 4.225% state levy. Localities can add as much as 5%, and the average combined rate is 7.89%. Food that qualifies for the federal supplemental nutrition assistance program (SNAP) and is intended for home consumption is taxed at 1.225%; local tax is also due.

Income Tax Range: Low: 1.5% (on less than $1,000 of taxable income); High: 6% (on more than $9,000 of taxable income). Residents can deduct some of their federal income tax from state taxable income (up to $5,000 per single filer/$10,000 for combined filers). Effective income tax rate: 5.3%/individual, 5.4%/joint.

Property Taxes: The median property tax on Missouri's median home value of $138,500 is $1,368.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Missouri.

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Montana

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State Taxes on Social Security: Social Security benefits are taxable. The taxable amount may be different from the federally taxable amount because Montana taxes some types of income that the federal government does not, and vice versa.

Sales Tax: No sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.

Income Tax Range: Low: 1% (on up to $2,900 of taxable income); High: 6.9% (on taxable income over $17,400). Montana permits filers to deduct some of their federal income tax. Effective income tax rate: 5.4%/individual, 6.5%/joint.

Property Taxes: The median property tax on Montana's median home value of $196,800 is $1,653.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Montana.

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Nebraska

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State Taxes on Social Security: A taxpayer may subtract Social Security income included in federal adjusted gross income if a taxpayer's federal adjusted gross income is less than or equal to $58,000 for married couples filing jointly, or $43,000 for all other filers.

Sales Tax: 5.5% state levy. Localities can add as much as 2.0%, and the average combined rate is 6.89%.

Income Tax Range: Low: 2.46% (on up to $3,060 of taxable income for single filers and $6,120 for married couples filing jointly); High: 6.84% (on taxable income over $29,830 for single filers and $59,660 for married couples filing jointly); Effective income tax rate: 4.3%/individual, 5.6%/joint.

Property Taxes: The median property tax on Nebraska's median home value of $133,800 is $2,474.

Inheritance and Estate Taxes: There is no estate tax. Nebraska's inheritance tax is a local tax administered by counties and ranges from 1% to 18%; assets passing to a spouse or charity are exempt from inheritance taxes.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Nebraska.

SEE ALSO: Kiplinger's Retiree Tax Map of the U.S.

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New Mexico

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State Taxes on Social Security: Benefits are taxed. But Social Security income can be included as part of an overall retirement-income exemption of up to $8,000 per person, subject to income restrictions.

Sales Tax: 5.125% state levy. Localities can add as much as 3.56%, and the average combined rate is 7.55%. New Mexico's tax is a gross receipts tax that covers most services.

Income Tax Range: Low: 1.7% (on up to $5,500 of taxable income for single filers and $8,000 for joint filers); High: 4.9% (on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly); Effective income tax rate: 4.1%/individual, 4.6%/joint.

Property Taxes: The median property tax on New Mexico's median home value of $158,400 is $1,197.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in New Mexico.

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North Dakota

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State Taxes on Social Security: Benefits are taxed to the same extent as on the federal tax return.

Sales Tax: 5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.78%. "New farm machinery, new farm machinery attachments or new irrigation equipment [used] exclusively for agricultural purposes" is taxed by the state at 3%. Local taxes may still apply.

Income Tax Range: Low: 1.10% (on up to $37,950 of taxable income for singles and up to $63,400 for married couples filing jointly); High: 2.90% (on taxable income over $416,700); Effective income tax rate: 1.10%/single, 1.56%/married.

Property Taxes: Median property tax on North Dakota's median home value of $155,400 is $1,719.

Inheritance and Estate Taxes: There is no inheritance tax and no estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in North Dakota.

SEE ALSO: Retirement Planning Mistakes You'll Regret Forever

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Rhode Island

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State Taxes on Social Security: Rhode Island doesn't tax Social Security benefits for single filers with up to $80,000 in adjusted gross income and joint filers with up to $100,000 in AGI.

Sales Tax: 7% state levy. No local taxes. Clothing and footwear with an item price of $250 or less are exempt.

Income Tax Range: Low: 3.75% (on up to $60,500 of taxable income); High: 5.99% (on taxable income over $137,650); Effective income tax rate: 3.8%/individual, 4.25%/joint.

Property Taxes: The median property tax on Rhode Island's median home value of $236,000 is $3,855.

Inheritance and Estate Taxes: Rhode Island has an estate tax with an exclusion level that's indexed to inflation (the 2017 threshold was $1,515,156). Rates range from 0.8% to 16%. There is no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Rhode Island.

See Also: 27 Cheapest Places Where You'll Really Want to Retire

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Utah

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State Taxes on Social Security: Social Security benefits are taxed. Benefits may qualify for a retirement-income tax credit.

Sales Tax: State levy is 5.95%, including a 1.25% tax that goes to local governments. Localities can add up to an additional 2.15% as well; the combined rate is 6.76%. Food is taxed at 3%.

Income Tax Range: Utah has a flat tax of 5%. Taxpayers are exempt from Utah individual income tax if their federal adjusted gross income is less than or equal to the sum of their federal standard deduction (excluding the extra deduction amounts for taxpayers 65 and older or for blindness) plus their federal exemption amount. Effective income tax rate: 4.7%/single, 5.0%/married.

Property Taxes: The median property tax on Utah's median home value of $223,200 is $1,480.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Utah.

SEE ALSO: 37 States That Don't Tax Social Security Benefits

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Vermont

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State Taxes on Social Security: Social Security benefits are taxed to the extent they are taxed at the federal level.

Sales Tax: 6% state levy. Municipalities can add 1% to that, but the average combined rate is 6.17%. A wide range of clothing is exempt. Soda, however, is taxable.

Income Tax Range: Low: 3.55% (on up to $37,950 of taxable income for singles and up to $63,350 for joint filers); High: 8.95% (on taxable income over $416,700 for single filers and over $421,900 for joint filers); Effective tax rate: 3.6%/individual, 5.2%/joint.

Property Taxes: The median property tax on Vermont's median home value of $214,600 is $3,797.

Inheritance and Estate Taxes: Estate tax is imposed on estates exceeding $2.75 million. The rate is a flat 16%. Vermont has no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Vermont.

SEE ALSO: Social Security Claiming Strategies Quiz

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West Virginia

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State Taxes on Social Security: Social Security benefits are taxed to the extent that benefits are taxed by the federal government.

Sales Tax: 6% state levy, municipalities can add up to 1% to that, but the average combined rate is 6.29%.

Income Tax Range: Low: 3% (on up to $10,000 of taxable income); High: 6.5% (on taxable income of $60,000 or more); Effective income tax rate: 4.1%/individual, 5.7%/joint.

Property Taxes: The median property tax on West Virginia's median home value of $103,900 is $616.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in West Virginia.

SEE ALSO: Great Places to Retire in All 50 States

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