4 States Where Taxes on Social Security May Fall Soon

Senior man with money
aerogondo2 / Shutterstock.com

Paying federal income taxes on Social Security benefits is a source of great irritation for millions of retirees. After years of coughing up payroll taxes to support the system, some retirees find it galling to be on the hook for an additional levy once they begin receiving benefits.

Even worse, depending on where you live, you might have to pay state income taxes on Social Security benefits, too.

Not every state has such a tax. In fact, 26 states do not Social Security tax benefits at all as of the 2020 tax year, the one for which your return is due this spring. Other states tax benefits to varying degrees.

This year, some states are considering reducing or eliminating such taxes. Following are a handful of states where government officials may give retirees a break on Social Security taxes.

1. West Virginia

New River Gorge Bridge
Kenneth Keifer / Shutterstock.com

In West Virginia, falling Social Security taxes are not simply a possibility, but a reality. As we have reported, the Mountain State has been phasing out all taxes on Social Security income for qualifying taxpayers: those with income of $100,000 or less, if their tax-filing status is married filing jointly, and income of $50,000 or less, if they have any other tax-filing status.

For the 2020 tax year, 35% of a qualifying taxpayer’s benefits are exempt from income taxes. For the 2021 tax year — the one for which your return is due in April 2022 — that figure rises to 65%. And by the 2022 tax year, the tax will be gone altogether for qualifying taxpayers.

2. Utah

Salt Lake City, Utah
Rigucci / Shutterstock.com

A bill moving through the Utah Legislature, House Bill 86, would provide a Social Security tax break to retirees earning up to $50,000 annually. The bill has passed the House and is on its way to the Senate.

The bill’s sponsor, Republican Sen. Walt Brooks, told St. George News:

“It’s a big step forward. … Technically, Social Security is something you’ve already paid over your lifetime.”

3. New Mexico

New Mexico Capitol
Zack Frank / Shutterstock.com

House Bill 49, which is being debated in the House Tax and Revenue Committee, would eliminate state Social Security taxes for all residents. If it passes the committee, it will move to the full House for consideration.

The bill faces some opposition, as opponents say it would cost New Mexico around $100 million in revenue. The notion of eliminating state Social Security taxes first arose in the 2020 Legislature but did not make significant progress.

4. Colorado

Denver Colorado
Kevin Ruck / Shutterstock.com

In his recent “state of the state” speech to Colorado lawmakers, Democratic Gov. Jared Polis proposed eliminating state taxes on Social Security benefits.

Polis said the proposal is part of a package of ideas intended to jump-start Colorado’s economy in the wake of the coronavirus pandemic:

“As Coloradans face tough times, we need to help folks get back on their feet and make life more affordable in our state, from job training to more affordable housing to reducing the tax burden on middle-class families.”

One Colorado newspaper noted that eliminating the state Social Security tax wouldn’t be especially costly. The state already exempts from taxation the first $24,000 in benefits from private, government and military retirement plans.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
15 Ways Retirees Can Make Their Savings Last Longer
15 Ways Retirees Can Make Their Savings Last Longer

Study these strategies to make your golden years gleam.

9 Ways to Boost Your Home’s Curb Appeal for Less Than $50
9 Ways to Boost Your Home’s Curb Appeal for Less Than $50

These products will instantly improve your home’s curb appeal without breaking the bank.

7 Deadly Health Mistakes People Make After Age 50
7 Deadly Health Mistakes People Make After Age 50

Simply avoiding these actions, or lack thereof, can improve the odds of a longer, more healthful life.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

The 2 Biggest Retirement Fears of Baby Boomers
The 2 Biggest Retirement Fears of Baby Boomers

Boomers have a lot of worries as they age, but two stand out.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

9 Mistakes People Make When Cleaning With Vinegar
9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

10 Things Successful Retirees Do Differently
10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.