10 U.S. States That Tax Your Social Security Benefits (and How)
From: legalguidancenow.com
Are Social Security benefits really taxable? Well, yes and no; it all depends on the state you live in. Vermont, for example, views Social Security benefits the same way as the feds. Meanwhile, Conneticut taxes them only if your income tops $50,000.
Regardless if you’re planning to move to another state soon or just travel there for a while, it’s important to know your rights and responsibilities. Here are the 13 U.S. states that tax your Social Security benefits.
Connecticut
State Taxes on Social Security: Every individual taxpayer with a federal adjusted gross income of under $50,000 has their Social Security an exempt. For married taxpayers who file jointly, they will have their Social Security exempted if their federal AGI is less than $60,000.
Sales Tax: Connecticut taxes most items at 6.35%; however, note that localities cannot add to that. Jewelry over $5,000 or clothing, footware and accessories that value more than $1,000/item are taxable at 7.75%.
Income Tax Range: At this point, the situation varies as following:
- Low: 3% – up to $20,000 of taxable income for married joint filers and up to $10,000 for individual filers;
- High: $6.99% – over $1 million for married joint filers and more than $500,000 for individual filers;’
- Effective income tax rate:1%/individual and 5%/joint filers.
Property Taxes: The median property tax on Connecticut’s median home value of $270,500 is $5,327.
Inheritance & Estate Taxes: Connecticut residents are subject to an estate tax on the transfer of estates valued at more than $2 million at a progressive rate that starts at 7.2%. For estates valued at above $10.1 million, the rate rises for up to 12%. There are no inheritance taxes.
Kansas
State Taxes on Social Security: If you have a federal adjusted gross income of less than $75,000, Social Secuirty benefits are an exempt.
Sales Tax: Localities can add up to 4%, while the average combined rate is of 8.62%. The same rates also apply on groceries. Seniors, disabled persons and those claiming dependent children can get a food sales tax credit of $125/person. In order to qualify for the credit, your federal adjusted gross income can’t exceed $30,615.
Income Tax Range: The tax range for incomes comes as following:
- Low:9% – less than $15,000 of taxable income for single filers and less than $30,000 for joint filers;
- High:2% – more than $30,000 of taxable income for single filers and over $60,000 for joint filers.
Property Taxes: The median property tax on Kansas’ median home value of $132,100 is $1,840.
Inheritance & Estate Taxes: None.
Minnesota
State Taxes on Social Security: Although Social Security income is taxable, married couples can subtract $4,500 of their federally taxable Social Security benefits from their state income. In this case, the break is of $3,500 for single and head of household and $2,250 for married separate filers.
Sales Tax: 6.875% state levy. Localities can add up to 1.5% making an average combined rate of 7.30%. Almost any piece of clothing and footware is exempt.
Income Tax Range: The income tax range in Minnesota comes as following:
- Low:35% – less than $25,390 of taxable income for single filers and less than $37,110 for joint filers;
- High:85% – 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% per individual and 6.6% for joint filers.
Property Taxes: The median property tax on Minnesota’s median home value of $188,300 is $2,148.
Inheritance & Estate Taxes: Although Minnesota doesn’t have an inheritance tax, it does have an estate tax. Starting 2018, the state raised its exemption to $2.4 million and it is expected to reach $3.0 million in 2020.
