42 States That Won’t Make You Pay Tax on Social Security Benefits

When you’re saving for retirement and making your plans to actually retire, you have many factors to consider. One of the most critical factors is figuring out whether you can afford to retire in your ideal location. In particular, this is one of the most important money moves if you want to retire early.

Calculating how much retirement income you’ll receive from your assets, pensions, and Social Security isn’t difficult. But researching how your income gets taxed in each state isn’t easy unless you do in-depth research or hire a tax advisor knowledgeable in the laws of all 50 states. Even more important — not all 50 states tax Social Security benefits at all. And picking a high tax state to retire in could end up being a costly retirement mistake.

Your local certified public accountants and other tax advisors typically specialize in preparing state tax returns for their area. They may not know the detailed rules of the state you plan to retire in across the country. The below list highlights the states in which you can avoid paying state tax on Social Security benefits.

This doesn’t mean everyone will pay taxes on their Social Security benefits in the unlisted state. Some people may not be required to pay state taxes on Social Security benefits depending on their particular income level or situation, so don’t give up if you don’t see your dream retirement location listed. It just may mean you need to talk with a professional about how to make your retirement savings go further.

And because income taxes on Social Security benefits aren’t the only major state-specific consideration, the list also highlights some other taxes you may want to be aware of.

Alabama

Alabama has a state income tax, but it doesn’t include Social Security benefits in its taxable income calculations. That means you won’t have to pay taxes on your Social Security benefits, which might be one foolish mistake you can avoid.

Even if you move to Alabama a bit before retirement, you won’t have to worry too much. The state’s income tax is a marginal income tax structure, much like the federal income tax. The lowest rate is 2%, and the highest rate is 5%, though this does not include income taxes imposed at the local level.

Alabama’s state sales tax rate is 4%, but localities can add hefty sales taxes that result in a total rate of over 9% in many cases. Property taxes in the state are some of the lowest in the nation, though.

Alaska

Alaska, also known as the Last Frontier, doesn’t have a state income tax. This can provide significant tax savings and means Alaska won’t tax your Social Security benefits.

The state doesn’t have a state sales tax, either. Localities may charge sales taxes, but these average a little less than 2%. Property taxes in Alaska are around average for the nation.

Alaska residents may also get a check from the state once per year from the state’s permanent fund dividend. If you love the cold and nature and don’t mind living in a less-populated state that’s a bit out of the way, Alaska may be worth considering.

Arizona

Arizona’s state income tax system exempts any federally taxable Social Security benefits you may have. This means your Social Security benefits are tax-free in Arizona.

If you move to Arizona before you retire or you want to earn extra cash in retirement, you should know that the state’s income tax rate is 2.5% for everyone.

Sales tax on the state level is 5.6%, and localities usually add a little less than 3% to that. The property taxes are relatively low compared to the rest of the nation. Not to mention, the state’s mostly warm and dry climate may be a good fit for many retirees.

Arkansas

Arkansas doesn’t tax your Social Security benefits because they aren’t included in this state’s taxable income calculations. For the not-yet-retired, Arkansas recently lowered its top individual income tax rate to 3.9%.

Arkansas charges a state sales tax of 6.5%, with localities adding an average of 3%. Property taxes in the state are below average nationally.

California

Although California has plenty of state-level taxes, you don't pay state income taxes on your Social Security benefits. As a pre-retiree, your marginal income tax will range from 1% to 12.3% depending on your income. Localities may impose additional income taxes as well.

California state sales tax is 7.25% with localities adding a little more than 1.5% on top of the state rate. Property taxes are below average on a national basis.

Although California has quite a few taxes, many people love living there. Some areas of the state have fantastic weather, but housing prices can be very high.

Delaware

Delaware’s state income tax system excludes federally taxable Social Security benefits. As a result, you don’t have to pay state income tax on Social Security benefits in this state.

The state’s income tax uses marginal income tax rates that range from zero to 6.6% based on your income. Localities may also charge their own income taxes.

Delaware doesn’t charge any state or local sales taxes. The property taxes charged are some of the lowest in the nation too.

District of Columbia

The District of Columbia, more commonly referred to as Washington, D.C., does have an income tax. That said, it doesn’t include Social Security benefits in its taxable income so you won’t pay on your benefits at the Washington, D.C. level.

For those who aren’t retired, the marginal income tax rates range from 4% to 10.75%. Washington, D.C.’s sales tax is 6% with no local add-ons, and its property taxes are some of the lowest across the country.

There are plenty of things to do in the District to keep retirees busy, including the Smithsonian museums, which you can visit for free.

Florida

Florida is another state that doesn't have an income tax, so your Social Security benefits won’t be taxed there.

The state does have a 6% sales tax, with localities adding a little more than 1% to the rate on average. Property taxes are about average compared to the rest of the nation.

This state’s warm climate and low tax burden have attracted retirees, but hurricane season can be disrupting for residents.

Georgia

You won’t pay state income taxes on Social Security benefits in Georgia because it exempts federally taxable Social Security income. Notably, Georgia recently passed legislation that outlined a flat tax rate that is now at 5.39%.

Georgia's sales tax is 4% on the state level, and local entities usually add more than 3% to this. Property taxes are about average compared to the country as a whole.

Hawaii

Hawaii doesn’t include Social Security benefits as taxable income on the state level. That means you won’t pay taxes on your Social Security benefits in the Aloha state.

If you’re bringing income outside of your Social Security benefits, you should know Hawaii has many marginal income tax rates that start as low as 1.4% and go as high as 11%.

Hawaii’s state sales tax is relatively low at 4%. Localities only add less than .5% to this on average. Property taxes in the state are the lowest in the nation.

Idaho

Idaho’s tax calculations exempt federally taxed Social Security income, which results in no state income taxes needing to be paid on your Social Security benefits.

But for other income, the marginal tax rate used in Idaho’s state income tax is a flat 5.8%. Idaho’s state sales tax is 6%, with local areas adding virtually nothing to this rate. Property taxes are below average nationally.

Illinois

Illinois doesn’t tax Social Security benefit income, and the regular Illinois’s state tax is straightforward at a flat 4.95% on all taxable income.

The state’s sales tax rate is 6.25%, and local governments have their own sales tax rates, which increase the overall rate by slightly less than 3%. Property taxes are also almost the highest in the country.

Indiana

Indiana does have a state income tax system, but it does not include Social Security benefits as taxable income.

If you’re planning to earn money in retirement, you’ll be glad to hear that Indiana recently lowered its income tax rate to 3.05%. Localities may add their own local income taxes, as well.

State sales tax is 7% across the state with virtually no locally added sales taxes. Property taxes are a little below the national average. Indiana’s four seasons and relatively low housing costs could attract potential retirees to the state.

Iowa

Iowa’s state income tax system doesn’t use Social Security in its taxable income calculations, so you won’t have to pay taxes on your benefits.

If you're not retired yet, the good news is that Gov. Kim Reynolds recently signed into law that will lower Iowa's individual income tax rate to 3.8% in 2025.

If you plan on living in Iowa when you retire, you should keep some local taxes in mind. Iowa has a 6% sales tax rate, which localities usually add a little less than 1% to overall. Property taxes are in the top 25% of the country.

Kansas

On June 21, 2024, Gov. Laura Kelly signed into law that Kansas residents who receive Social Security benefits will no longer pay state income taxes. It was part of a larger tax relief bill Kelly signed which gave married couples in particular, “thousands” back in tax breaks.

While this does not address the state’s high property taxes, the relief this provides will not negatively impact communal issues. Kelly emphasized that this break allows schools, roads, and bridges as well as the State Water Plan to be fully funded. 

Kentucky

Kentucky’s state income tax system doesn’t factor in Social Security benefits in its taxable income calculations. The result is no taxes on your Social Security.

Kentucky has a flat 4% income tax rate, although recent legislation is in place to lower it to 3.5% in 2026. The state’s localities may also have a local income tax you may have to pay.

Kentucky’s sales tax rate is 6% and localities don’t normally add anything to this. Its property taxes are a little bit below average compared to the rest of the states.

Louisiana

Louisiana doesn’t tax your Social Security because those benefits aren’t considered taxable income in the state. The state’s regular income tax system has three marginal tax rates. The lowest is 1.85% and the highest is 4.25%.

Louisiana has a 4.45% state sales tax rate, but localities often increase this by a little more than 5%. The state's property taxes are some of the lowest nationwide.

Maine

Maine’s state income tax doesn’t consider Social Security benefit income as taxable, so you won’t pay Maine income taxes on these funds. The state’s marginal income tax structure starts at 5.8% and can be as high as 7.15%, depending on your income.

Maine’s state sales tax rate is a flat 5.5% with no extra sales tax option for localities. The property taxes charged are above average, though. The state’s natural beauty may attract nature-loving retirees, but you’ll need to be ready for long and harsh winters.

Maryland

Maryland’s state income tax doesn’t include Social Security benefits. For other income, the state has eight marginal tax brackets starting as low as 2% and increasing to 5.75%. Localities in the state have local income taxes on top of these rates.

Maryland’s sales tax is 6% throughout the state with no local add-ons. Property taxes are slightly above average.

Massachusetts

Massachusetts’s state income tax system doesn’t tax Social Security due to rules that exclude federally taxable Social Security benefit income. The regular income tax system imposes a flat-rate 5% tax on all taxable income.

Massachusetts’s sales tax rate doesn’t usually have localities adding their own taxes. The state sales tax rate is a flat 6.25%. Property taxes are above average as well.

Michigan

Michigan residents don’t pay state tax on their Social Security benefits because it isn’t part of the state’s taxable income calculations.

This state also imposes a flat rate of 4.25% on all taxable income. Localities may require paying additional income taxes. Localities don’t usually increase Michigan’s 6% sales tax rate, buy their property taxes are above average.

Mississippi

If you plan to live in Mississippi for retirement, your Social Security benefits aren’t considered taxable income for the state’s tax calculations. Mississippi currently offers a flat income tax rate at 4.7%, although it is set to lower to 4.4% in 2025 and 4% in 2026.

Mississippi has one of the highest state sales tax rates at 7%, but localities add almost nothing to it. Their property taxes are well below average, too. Overall the state offers one of the lowest costs of living in the U.S.

Missouri

As of January 1, 2024, Missouri became a state where Social Security benefits are also exempt from state taxes.

The law to remove the income limits that previously determined who must and mustn't pay state taxes on Social Security benefits passed in 2023. Missouri residents who are 62 of age or older are no longer being taxed this year. Changes will be seen when taxes are filed in 2025.

Nebraska

Here's another state that eliminated its taxes on Social Security benefits. Originally, Nebraska officials began enacting a plan to phase out income taxes on Social Security Benefits, reaching 100% by 2030.

However, on April 7, Governor Pete Ricketts signed a tax exemption law in Legislative Bill 873 that phased out Social Security income tax completely by 2025, shaving 15 years off the timeline.

The state is also working on lowering its top income tax rate. Although it currently sits at 5.84%, the plan is to get it to 3.99% by 2027. 

Nevada

There is no state income tax in Nevada, and this includes there being no state income tax on Social Security benefits. Nevada has a 6.85% sales tax rate, and localities add roughly an extra 1.5% to that. Property taxes are below average compared to the nation, though.

Retirees looking for adventure can head to the Las Vegas area, where there is a lot of dining and entertainment to enjoy, even if you’re not into gambling.

New Hampshire

New Hampshire’s state income tax system doesn’t require paying on Social Security benefits as they aren’t part of the state’s taxable income calculations. In fact, you’ll pay only state income tax on dividend and interest income at a flat 5% tax rate.

New Hampshire has no state or local sales taxes, but it has some of the most expensive property taxes.

New Jersey

New Jersey residents may have to pay a lot of taxes, but state tax on Social Security benefits isn’t one of them. Social Security benefit income isn’t included in New Jersey’s taxable income calculations.

For other income, the marginal tax rate structure starts at 1.4% and can be as high as 10.75% for extremely high-income individuals. Localities may also add a local income tax.

New Jersey's state sales tax is 6.625%, and it has the highest property taxes in the U.S.

New York

New York’s state income tax calculations exempt federally taxable Social Security benefit income. This results in no state income tax on your Social Security benefits.

Marginal income tax rates start at 4% and increase to 10.9% for the highest earners. Local income taxes are in addition to the state tax rates. New York state sales tax is 4% but localities add about 4.5% to this on average. Property taxes in the state are also above the national average.

If you’re considering New York for retirement, remember there’s a lot more to it than New York City, and there are more affordable areas of the state you can live in.

North Carolina

North Carolina is another state working on lowering its income tax rate over the coming years. Starting at 4.5% in 2024, the rate will drop to 4.25% in 2025 and 3.99% the following year. The state’s rules don’t include Social Security benefits in their taxable income calculations, though.

The state of North Carolina charges a 4.75% sales tax and its localities have sales taxes of a little less than an additional 2.25%. Property taxes are just below average.

North Dakota

The state of North Dakota stopped taxing Social Security benefits back in 2021, and legislation in 2023 lowered income tax rates in 2023.

More specifically, the state collapsed its marginal tax rate system from five to three rates, ranging from zero to 2.5%.

Ohio

Ohio excludes federally taxable Social Security benefit income from state income taxes.

If you move to Ohio before you retire, you’ll need to know that the state's marginal income tax rates start at 2.75% and go as high as 3.75%.

Ohio’s state sales tax rate is 5.75%, with localities adding about 1.4%. Ohio residents pay a higher property tax rate than the national average.

Oklahoma

Oklahoma doesn’t require you to pay state income tax on Social Security benefits. Outside of Social Security, the state has a marginal income tax rate system. It starts at zero and reaches as high as 4.75%.

Oklahoma’s state sales tax is 4.5%, with localities adding an extra 4.5%. Property taxes are roughly average compared to the country.

Oregon

Oregon doesn’t include Social Security benefits in the state’s income tax calculations making this income free from state tax. The state’s marginal income tax rates start at 4.75%. The top marginal tax rate is 9.9%.

Oregon and its localities do not charge sales taxes. Property taxes are about average for the nation.

This northwestern state is home to Portland, a city just an hour's drive away from both the ocean and the mountains. Those looking for a vibrant city close to these natural features may consider this as a potential place to retire.

Pennsylvania

Pennsylvania doesn’t include Social Security benefits in the calculations required for determining taxable income in the state’s income tax system.

Pennsylvania’s flat income tax rate is 3.07%, but local governments may have extra income taxes. The state sales tax rate is 6%, with localities adding an average of .34 %. Property taxes are well above the national average.

South Carolina

South Carolina doesn’t require that you pay state income taxes on Social Security benefits. But South Carolina’s marginal tax rates range from 0% to 6.2% depending on your taxable income.

Sales tax rates for South Carolina are 6% on the state level and roughly 1.5% for localities. Property taxes are some of the lowest in the country.

The Palmetto State is far enough south to avoid harsh winters and has a lot to offer to retirees. The state’s beaches can be a great quick getaway, and you can easily explore the mountains as well.

South Dakota

South Dakota doesn’t tax your Social Security benefits or any other income on the state level as it has no state income tax.

The state’s sales tax rate is also low at 4.5%, though localities usually add about 1.9%. On the flip side, South Dakota’s property taxes are above average.

Tennessee

Tennessee is another state that does not have an individual income tax and does not tax Social Security benefits. This gives you one less thing to worry about during retirement.

The state’s sales tax rate is 7%, and local governments add their own sales taxes of about 2.5%. Property taxes are below average.

Texas

The great state of Texas doesn’t tax Social Security benefits because it doesn’t have a state income tax at all.

Texas has a 6.25% sales tax rate and the localities add approximately another 2% to that. The property taxes are among the nation’s highest though.

If you’re looking for a no-income tax state to set yourself up in preparation for retirement, few states offer the sheer size and diversity of communities and landscapes that Texas does.

Virginia

Virginia excludes federally taxable Social Security benefits from its state income tax calculations. This results in no state income tax owed on Social Security.

Virginia’s state tax system is a marginal tax rate system with rates ranging from 2% to 5.75%.

The state sales tax rate is 5.3%. Localities have sales tax rates of a little more than .25%. Property taxes are barely below the national average.

Washington

This northwestern state is another of the seven states that don’t have a state income tax. Your Social Security benefits won’t be taxed on the state level here because of this.

Washington does have a 6.5% state sales tax and localities add approximately another 2.75% to that. Property taxes in the state fall right around the country’s average.

The Olympic Peninsula, in particular, is an increasingly popular place for people to choose for retirement due to its mild winters and gorgeous environment.

West Virginia

Although West Virginia used to tax Social Security benefits, the state began phasing this out through legislation in 2019. Currently, married couples filing jointly with an adjusted gross income below $100,000 and single filers below $50,000 are not taxed on their benefits.

In March, the state passed the final bill to eliminate the tax by 2027. State taxes paid on Social Security benefits in 2024 will be reduced by 35%, and then by 65% on Social Security income earned in 2025, and residents will no longer pay taxes on Social Security earned in 2026.

The state operates on a marginal income tax system and plans to lower rates to range from 2.27% to 4.92% in 2025. West Virginia’s property taxes are one of the lowest in the country, making the state quite appealing for retirees.

Wisconsin

If you retire to Wisconsin, you won’t pay state income taxes on your Social Security benefits. When it comes to other income, the state’s marginal tax rates can be as low as 3.5% or as high as 7.65%.

Wisconsin has a 5% state sales tax rate, to which localities add about .5%. The state’s property taxes are some of the highest in the nation.

Wyoming

Wyoming is the last state on this list that does not have a state income tax at all. That means your Social Security benefits won’t be taxed on the state level, and neither will any of your other income before or after retirement.

Wyoming’s state sales tax rate is only 4% with localities adding about 1.3% on top. Property taxes in the state are almost the lowest in the country.

Although Wyoming can be a wonderful summer destination for outdoors lovers, retirees should consider just how much winter they want to experience as they grow older. But if you plan to snowbird, Wyoming could be a good pick for you.

Bottom line

While you may have to pay tax to the federal government, 38 states and the District of Columbia do not tax Social Security benefits at the state level. West Virginia is now on the list for the 2022 tax year, yet with an asterisk as there are specific income requirements to qualify for the tax exemption. Although taxation of Social Security benefits is one factor you may want to consider when deciding where to retire, it may not be the most significant factor.

Other state taxes — such as sales tax, property tax, and taxes on interest and dividends — could result in a much larger bill than any amount of Social Security that ends up being taxed. For this reason, you likely want to learn how to invest money in tax-advantaged retirement accounts and learn more about tax planning in general. Speaking with a financial advisor could help you with this process.

Finally, don’t make one of the common mistakes when picking a place to retire — only considering monetary factors. Although living on a fixed budget and reducing your tax liability may take some planning, don’t forget that you also want to enjoy your retirement years. You may be willing to pay taxes on Social Security benefits to live close to friends and family or to live in the community of your dreams.