According to Tododisca, Starting in September, retirees in certain states may see a decrease in their Social Security benefits due to changes in state taxes. While Social Security payments are distributed equally across the United States, state taxes can impact the final amount retirees receive each month.
States Increasing Taxes on Social Security Benefits
This Article Includes
From September, nine states will adjust their taxation policies on Social Security income, potentially reducing monthly benefits for some retirees. These states are:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Who Will Be Affected by the New Taxes?
The impact of these tax changes depends on individual income levels. Retirees with high Social Security benefits or additional sources of retirement income may face increased taxes. Those with an average benefit check of around $1,800 may not see significant changes, but it depends on their total income.
How to Avoid Increased Social Security Taxes
The only way to avoid these new taxes is to live in a state that is not implementing these changes. Retirees should ensure they accurately report all income on their tax returns and may need to adjust their budgets to account for any potential reductions in their Social Security benefits.
Plan Ahead for Financial Security
Retirees in affected states should prepare for possible changes in their monthly income. Reviewing income sources and creating a budget can help manage any financial impact resulting from the increased state taxes on Social Security benefits.