According to an AARP analysis, roughly one in seven retirees in the U.S. rely on their monthly Social Security. But these benefits don’t always come without Uncle Sam’s strings attached. Let me assure you this does NOT apply to all recipients within our listening area, but for others, they are out of luck!

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The taxation of Social Security began in 1984, following the enactment of Amendments in 1983, which President Reagan signed into law. Under that law, up to 50% of Social Security benefits could be added to taxable income, provided the taxpayer’s total income exceeded certain thresholds.

To worsen financial matters for retirees depending on Social Security to make ends meet, some states impose their own state income taxes on benefits. Fortunately, there aren’t nearly as many locales that impose their own tax on Social Security as those that don’t.

It's Tax Time Again!
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Brian Kuhn CFP, CLU, SVP and financial advisor at Wealth Enhancement Group reiterated as each state makes its own rules, that move is sometimes subject to change:

“The list of states that do not tax Social Security is much longer than those that do". Only 10 states do or will continue to tax Social Security benefits in 2024 

Ultima_Gaina
Ultima_Gaina
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They include Colorado, Connecticut (what else is new, not surprising; I'm glad I became a Bay State resident),  Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia,”

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Hanif Zahari
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The good news is that Massachusetts and neighboring New York do NOT fall in this category. Recipients should continue to monitor their finances and everything should be A-OK when it comes to budgeting your monthly expenses.

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prospective56
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Kuhn pointed out that you can calculate how much you’re saving on taxes if you live in a state that does not tax Social Security benefits. Simple arithmetic (I was always lousy in math) Look up the effective rate of tax you paid to your state for all taxed income sources and applying that to your total Social Security benefits.

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“So, for example, if your effective rate in your state was 5%, and you received $30,000 in Social Security benefits, that would be a savings of $1,500”

From a big picture perspective, the amount saved among retirees who are not taxed on Social Security benefits by their state of residence is quite impressive.

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MariuszBlach
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BOTTOM LINE: More MOOLAH, MOOLAH, MOOLAH in your pocket and that's a GOOD thing if you ask me!

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Gallery Credit: Eliza Siegel

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