Did you know that depending on where you live, your Social Security may be getting hit by the federal income tax?
For the majority of Americans, this could come as a big surprise: 37 of 50 states exempt Social Security income from taxes. But retirees in the remaining 13 states are expected to pay taxes on their benefits like any other income.
In some cases, state income taxes may be imposed on beneficiaries making more than a certain amount of income each year (rules for this are typically based on or match the federal income tax rules).
Knowing which states exempt or tax Social Security income is crucial for Americans on the cusp of retirement who might be considering relocating after leaving work.
This article by Dan Caplinger over at The Motley Fool goes region by region identifying the best and not-so-great states for avoiding Social Security income taxes and getting the most out of your benefits. A must-read if you’re closing in on Retirement Day!