Many retirees heavily rely on Social Security benefits to get by. For some, the benefits are their only source of income. Considering the rising inflation and cost of living, Social Security benefits are becoming more and more crucial to retirees. Here’s a list of residents in 9 states that might see slashed benefits.
A Gallup poll survey reveals that Social Security benefits are the primary source of income for 6 out of 10 American seniors. That statistic has been the highest recorded since 2002, proving that the benefits are more of a necessity than a supplementary income for many. A new report suggests that individuals in these 9 states might face a potential 10% in the benefits they receive.
Residents of Colorado who are over 65 years of age and people with an AGI that falls below $75,000 do not have to pay taxes on their Social Security. Also, people who have filed for benefits jointly, whose AGI is under AGI under $95,000, do not have to pay taxes either.
Beneficiaries who are below 65 years of age with an income high enough to qualify for a full tax exemption could face a $20,000 deduction on their Social Security income. Any federally taxable amount over $20,000 could face a deduction of 4.4%.
When it comes to Rhode Island, beneficiaries with an AGI under $104,200 do not have to face deductions on Social Security. The same applies to joint fillers with an AGI under $130,250. All other individuals are taxed around 4.75% to 5.99%, even on their federal income.
Vermont taxpayers with an AGI below $50,000 and joint filers with an AGI below $65,000 do not face deductions on their Social Security income. People whose incomes fall within $10,000 of the set brackets could face a partial deduction.
Twelve states also tax some or all of their residents’ Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont and West Virginia. https://t.co/xdNsiWchBm
— Cutenclassee (@CutenClassee) July 27, 2023
If an individual’s AGI is above $60,000, and joint filers with an AGI above $75,000, they have to pay taxes on their social security income. They might face tax deductions ranging from 3.35% to 8.75%.
In New Mexico, individuals with an AGI of $100,000 or less are excluded from paying state tax on their Social Security income. The same applies to joint filers with an income of $150,000 or less. Others pay a tax deduction that ranges from 4.9% and 5.9%.
When it comes to Connecticut, individuals with an AGI of $75,000 and joint filers with an AGI below $100,000 do not have to pay state taxes on their Social Security income. People whose AGI crosses the set threshold have to pay state taxes. Only 25% of their benefits might be taxed. The tax deductions vary from 4.5% and 6.99%.
Minnesota residents with an AGI of $84,490 are exempt from paying state tax on their social security income. The same applies for joint fillers with an AGI of $108,320. For every $4,000 that you earn over the set threshold, an additional 10% of your Social Security benefits are taxable. Taxpayers might face a tax deduction of 6.8% to 9.85%.
West Virginia residents with an AGI below $50,000, and joint filers with an AGI below $100,000 do not have to pay taxes on their social security benefits. People with higher incomes are taxed 35% on their Social Security benefits. The same applies to their federal taxable income.
The state tax in West Virginia ranges from 4.44% to 4.82%. Reports suggest that the state might exempt all taxpayers from paying state taxes on their Social Security benefits from 2026.
Once Social Security becomes tax-exempt in Missouri in 2024, only 11 states will still tax benefits: Colorado, Connecticut, Kansas, Minnesota, Montana, Nebraska, New Mexico, Rhode Island, Vermont and West Virginia.
— Harry Bell (@BellLawFirmWV) August 17, 2023
The state of Montana taxes Social Security the same way the federal government does. Individuals over 65 years of age are given an additional $5,660 deduction. The state tax of Montana ranges from 4.7% to 5.9%.
Utah residents’ Social Security income that is included in their federal taxes also faces a state tax deduction. Individuals with an AGI below $45,000 and joint filers with an AGI below $75,000 can redeem a tax credit that offsets the state taxes for their federally taxable Social Security benefits. The state tax in the state is 4.55%.
