Understanding which states do not tax Social Security income can be beneficial for financial planning. In conjunction with the cost of living index, this information helps retirees maximize their income and make informed decisions about where to reside.
Alabama
Retirement income in Alabama is lessened since Social Security is not taxed there. The cost of living index in this state is 88.8 and is highly tax friendly. It offers an affordable retirement option that appeals to seniors.
Alaska
Alaska’s lack of state income means Social Security benefits remain untaxed. Despite a higher cost of living index of 124.4, the state’s very high tax friendliness and annual Permanent Fund dividend make it attractive for retirees.
Arizona
Arizona exempts Social Security from state taxes and is phasing out taxes on other retirement income. Its cost of living index of 107.2 and high tax friendliness, combined with warm weather, make it a popular retirement destination.
Arkansas
Arkansas does not tax Social Security benefits and offers tax breaks on other retirement income. With a low cost of living index of 90.3 and high tax friendliness, the state provides an affordable retirement option.
California
California does not tax Social Security, but its high cost of living index of 134.5 and low tax friendliness can offset this benefit. However, the state’s progressive tax system may impact high-income retirees more significantly.
Delaware
Delaware exempts Social Security from state taxes and has no sales tax. Its cost of living index of 102.6 and high tax friendliness, along with relatively low property taxes, contribute to its appeal to retirees.
Florida
Florida’s lack of state income tax means untaxed Social Security benefits. Many people find this state to be highly desirable due to its pleasant weather, high tax friendliness, and the cost of living index of 102.3.
Georgia
Social Security is not taxable in Georgia, and there are deductions available for other retirement income. Its low cost of living index of 91 and high tax friendliness make it an attractive option for budget-conscious seniors.
Hawaii
Hawaii exempts Social Security from state taxes. However, its extremely high cost of living index of 179 and moderate tax friendliness can be a challenge for retirees. The state’s natural beauty may outweigh financial considerations for some.
Idaho
Idaho does not tax Social Security and has a cost index of 106.1. Its high tax friendliness and beautiful natural surroundings make it an appealing option for outdoor-loving retirees.
Illinois
Illinois exempts all Social Security income from state taxes. Despite its moderate tax friendliness and relatively low cost of living index of 90.8, high property taxes can impact overall affordability for seniors.
Indiana
Indiana does not tax Social Security and has a flat income rate. With a low cost of living index of 91.5 and high tax friendliness, the state offers an affordable retirement environment.
Iowa
Iowa is phasing out taxes on all retirement income, including Social Security. Its cost of living of 89.7 and increasing tax friendliness are making the state more attractive to retirees.
Kentucky
Kentucky exempts Social Security from state taxes and offers exclusions for other retirement income. Its low cost of living index of 93.8 and high tax friendliness contribute to its appeal to seniors.
Louisiana
Louisiana does not tax Social Security benefits and has low property taxes. With a cost of living index of 92 and high tax friendliness, the state offers an affordable retirement option with unique cultural attractions.
Maine
Maine exempts Social Security from state taxes and offers some deductions for other retirement income. Despite a high cost of living index of 111.5 and moderate tax friendliness, its natural beauty attracts a lot of people.
Maryland
Maryland does not tax Social Security and offers some pension exclusions as well. Its higher cost of living index of 119.5 is balanced by moderate tax friendliness and proximity to major cities.
Massachusetts
Massachusetts exempts Social Security from state taxes but has a high cost of living index of 148.4. Its moderate tax friendliness and strong healthcare system attract some retirees despite the higher expenses.
Michigan
Michigan does not tax Social Security and offers deductions for other retirement income. With a moderate cost of living index of 92.7 and high tax friendliness, it provides an affordable retirement option.
Mississippi
Mississippi fully exempts Social Security and other retirement income from state taxes. Its low cost of living index of 85.3 and very high tax friendliness make it exceptionally affordable for many individuals, especially retirees.
