As a retiree, you’ll probably count on Social Security to help you cover the necessities. If that’s the case, getting the largest amount of retirement benefits possible will be important.
That’s why you need to know that your location can affect the amount of those benefits that you get to keep.
See, if you live in any one of 37 states, you may get to bring home more of your Social Security retirement income than your peers in the remaining 13 places in the U.S. Here’s why.
Retirees in these 37 states don’t need to worry about losing their benefits to this big expense
Retirees in certain states could end up keeping more of their Social Security checks than other seniors for one simple reason. The rules for taxation of Social Security vary by location across the country.
See, in the following 37 places across the U.S., there are no state taxes assessed on Social Security benefits regardless of your income level.
In some of these places, such as Florida, there’s no tax on Social Security because there is no income tax at all. In others, taxes may be charged on some or most income, but Social Security benefits are exempt regardless of income level.
But regardless of the specific reason, if you happen to make one of these 37 states your home in later years, you won’t have to worry about giving up any of your retirement income to your local government.
Does this mean you won’t owe any taxes on Social Security?
Now, you may end up owing IRS taxes on Social Security checks, depending on how much you earn, even if your state doesn’t take a cut.
Federal taxes on Social Security benefits start once your income hits $25,000 as a single tax filer or $32,000 as a married joint filer — although only provisional income counts. That’s half your retirement benefits, plus some non-taxable income and all taxable income.
Depending on that provisional income, between 50% and 85% of your retirement benefits could be taxed at the federal level.
Still, since your state won’t stake its claim, you’ll still end up with more money from Social Security than many of your peers in the remaining 13 U.S. locales.
What about retirees in the other 13 states?
If you don’t live in one of these 37 states and are worried about losing some of your Social Security checks, you’ll need to learn your local rules.
Generally, only higher earners are subject to state Social Security tax. But not all locations mirror the federal rules in terms of when benefits become taxable. You’ll want to check with your state’s department of revenue to find out the specifics of when they take taxes from retirement checks.
If you find yourself losing some of your Social Security, you may want to consider relocating to a place with more favorable tax rules for retirees. This could help your limited income stretch further so you can make the most of your later years.
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