By Leada Gore
al.com
(TNS)
Social Security is a lifeline for many retirees. Surveys have shown up to 39% of retirees said the program accounts for the entirety of their retirement funds, while up to 14% said it accounts for their only major income source.
Recognizing the vital role the program plays for many, the majority of states exempt Social Security income from taxation. Eight do not, however, though rules of what is taxed vary widely.
The federal government also taxes Social Security benefits, depending on the recipient’s level of income.
Here are the eight states that tax Social Security, per AARP:
Colorado
Residents age 65 and older can deduct Social Security benefits from their state income tax, depending on income. Filers with adjusted gross income of $95,000 or more can deduct up to $20,000 in retirement income, including Social Security; income above that level is taxed at 4.4%.
Connecticut
Depending on AGI, filers can deduct most all of their benefit income. Higher earners get a partial exemption with no more than 25% of Social Security benefits taxed.
Minnesota
Single filers with up to $86,410 income for an individual or $110,780 for joint filers are exempt from state taxes on their Social Security income. Higher-income residents can qualify for partial tax break.
Montana
State does not tax Social Security for people with overall incomes of less than $25,000 for single filers or $32,000 for couple filing jointly. Higher earners are taxed based on range of 4.7% to 5.9%.
New Mexico
Social Security income for single filers with AGI below $100,000 or couples below $150,000 are fully tax-deductible. People earning above those limits must include the portion of benefits subject to federal and state income tax. New Mexico taxes at rates from 1.5% to 5.9%.
Rhode Island
People who have reached full retirement age (67 for those born in 1960 and later) and have AGIs below a certain level aren’t taxed. People who haven’t reached FRA and have higher incomes are taxed at state rates ranging from 3.75 to 5.99%.
Utah
Married couples filing jointly reporting incomes of $90,000 or less or singles making $54,000 or less qualify for a full tax break. People earning more qualify for partial break, with tax credit reduced by 2.5 cents for each dollar above the income thresholds.
Vermont
Single filers with an AGI of $55,000 or less qualify for full exemption from pay state taxes; those who make between $55,000-$65,000 are eligible for partial exemption. Couples filing jointly receive full exemption to up to $70,000 and phases out between $70,000 and $80,000. Higher earners are taxed at state rates ranging from $3.35 to 8.75%.
No state taxes Supplemental Security Income, or SSI, a monthly benefit for low-income seniors age 65 and older, people with disabilities or the blind.
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