( Spanish) — More than 10 states tax Social Security benefits, although rates and deductible amounts vary widely, depending on your income and, in some cases, your age as well. Here, a guide to understand how much you should pay where.
Both the federal government and some state governments tax Social Security benefits. Below we explain how each charge is.
Federal taxes on Social Security benefits
If you have substantial income beyond Social Security benefits, such as from salary, interest, or dividends, among other categories, you may have to pay federal taxes on those benefits.
According to him Internal Revenue Service regulations With the IRS, you may have to pay taxes on up to 50% of your earnings if you file an individual tax return and your combined income (adjusted gross income plus nontaxable interest). and half of Social Security benefits) is between $25,000 and $34,000. If your combined income exceeds that figure, up to 85% of the benefits may be taxable.
If you file a joint return with your spouse and your combined income is $32,000 to $44,000, you may be taxed on up to 50% of Social Security benefits. The figure increases to 85% if the combined income is more than $44,000.
If you are married and file a separate tax return, according to the government, you will probably pay taxes on the benefits.
What happens at the state level?
According to the non-profit organization AARP, there are 12 states in which Social Service benefits are taxed. However, in some cases there are full or partial exemptions that generally depend on one of two factors: income and age. Here, a review of the situation state by state.
Colorado
At the rate set by the state, benefits are taxed at 4.4%, but residents can deduct up to $20,000 in retirement income if they are between the ages of 55 and 64.
If residents are age 65 or older, they can fully deduct their Social Security benefits starting this year for tax year 2022.
Connecticut
You pay state taxes on benefits if you adjusted gross income individual is greater than US$75,000 and if the income is greater than US$100,000 in the case of couples filing jointly. In these cases, you may have to pay up to 25% of the benefits.
Kansas
You pay state taxes on Social Security benefits if your individual adjusted gross income is more than $75,000. The tax rate to be paid ranges from 3.1% to 5.7%.
Minnesota
This state follows the federal rules initially explained to define who must pay taxes on your benefits. However, it also has a rule called “Social Security subtraction” that allows a partial deduction excluding up to approximately US$4,260 of taxable benefits and up to US$5,450 for married couples. That possible deduction is eliminated for those who have income of more than US$64,670 (US$82,770 in the case of couples filing jointly).
Missouri
You pay state tax on benefits if your single adjusted gross income is more than $85,000 (and more than $100,000 for couples filing jointly) and you’re under age 62, although partial deductions may apply. The rate ranges from 0 to 5.4%.
Mountain
You pay tax on benefits if your overall income is more than $25,000 ($32,000 for couples filing jointly), the same federal government thresholds. The rate ranges from 1 to 6.75%.
Nebraska
You pay tax on benefits if your individual adjusted gross income is more than $45,970 (and more than $61,760 for couples filing jointly). The rates are between 2.46% and 6.84%, although according to the AARP, with a law enacted in April 2022, Nebraska will “eliminate taxes on Social Security income in the coming years.” The reduction in taxes on benefits will reach 60% by 2022, until it reaches zero by 2025.
New Mexico
Starting in 2022, under a law passed by state legislators and signed by the governor, everyone with an individual adjusted gross income of less than $100,000 ($150,000 for couples filing jointly) can deduct income from benefits. ). Rates range from 1.7% to 5.9%.
Rhode Island
Rhode Island charges rates between 3.75% and 5.99%, but there are major exceptions. Those who have reached full retirement age (which depending on the year of birth can range between 66 and 67 years) and have an individual adjusted gross income of less than US$ 95,800 (US$ 119,750 in the case of of couples filing jointly).
Utah
Utah charges a 4.85% rate, but you can get a full tax credit on those taxable benefits if you have individual income less than $37,000 ($62,000 for couples filing jointly). If you earn more, the credit is partial: “it is reduced by 25 cents for each dollar that exceeds the mentioned thresholds,” mentions the AARP.
Vermont
If you earn at least $55,000 ($70,000 for couples filing jointly), you must pay all income tax, which ranges from 3.35% to 8.75%.
However, individual taxpayers with an adjusted gross income of $45,000 or less are exempt from paying taxes on Social Security benefits; if you earn between $45,001 and $54,999, you may receive a partial exemption. For married couples filing jointly, the exemption is complete if they earn $60,000 or less; if they earn between $60,001 and $69,999, the exemption phases out.
W.V.
You pay tax on benefits if your individual adjusted gross income is more than $50,000 (and more than $100,000 for couples filing jointly). The rate is between 3% and 6.5%.
