A large cost-of-living adjustment will help Social Security keep up with inflation in the years to come. Even though your checks will get bigger, you won't get to keep all the extra money.

If you live in a state that taxes Social Security benefits, you may have to give some of your money to the government. Residents in the following 38 states won't have to worry about this when filing their taxes.

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These states don't tax Social Security benefits

Some states don't tax the Social Security benefits of their senior citizens.

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Delaware
  7. Florida
  8. Georgia
  9. Hawaii
  10. Idaho
  11. Illinois
  12. Indiana
  13. Iowa
  14. Kentucky
  15. Louisiana
  16. Maine
  17. Maryland
  18. Massachusetts
  19. Michigan
  20. Mississippi
  21. Nevada
  22. New Hampshire
  23. New Jersey
  24. New York
  25. North Carolina
  26. North Dakota
  27. Ohio
  28. Oklahoma
  29. Oregon
  30. Pennsylvania
  31. South Carolina
  32. South Dakota
  33. Tennessee
  34. Texas
  35. Virginia
  36. Washington
  37. Wisconsin
  38. Wyoming

If you live in one of these places, you still have to pay benefit taxes. Seniors with high enough incomes are taxed on their Social Security benefits. Half of your annual Social Security benefit is included in your provisional income.

Individuals with incomes over $25,000 and married individuals with incomes over $32,000 could owe taxes on up to half of their benefits. Up to 85% of the benefits of individuals with incomes greater than $34,000 and married couples with incomes greater than $44,000 could be taxed.

This doesn't mean you will lose all of your benefits. The government would tax your benefits at your ordinary income tax rate. If you were in the 12% tax brackets, you could be taxed on up to 50% or 85% of your Social Security benefit.

These 12 states do tax Social Security benefits in at least some cases

You could owe benefit taxes to your state government if you live in one of these states.

  1. Colorado
  2. Connecticut
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Nebraska
  8. New Mexico
  9. Rhode Island
  10. Utah
  11. Vermont
  12. West Virginia

Each state has its own rules about who owes Social Security benefit taxes. You might not have to pay anything. Those with yearly incomes are exempt from certain thresholds.

If you're worried that you might owe state taxes on your Social Security benefits, contact your state Department of Taxation.

What can you do about Social Security benefit taxes?

Sometimes Social Security benefit taxes can be avoided. Some people may be able to pull it off by keeping costs low. If you can reduce your annual income so that it's below the thresholds listed above or the threshold for taxation in your state, the government will allow you to keep all of your benefit.

They can be used to help keep your income low. You already paid taxes on your contributions the year you made them, so money you withdraw from the account doesn't count. If you're near the threshold for benefit taxation, you can use your savings for the rest of the year.

If this isn't possible for you, you will have to pay taxes on your Social Security benefits. There is a chance that this will not result in a tax bill. It could be a little smaller if you have a refund. It is good to know how these taxes will affect your tax liability.

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