New Mexico: New Mexico taxes Social Security income at a rate of 1.7% to 5.9%.The reduction will grow in steps to 50% by 2025, at which point state lawmakers will vote on whether to eliminate the tax on benefits altogether by 2030. Additionally, Nebraska is phasing out taxation of benefits under a new state law, which began in the 2021 tax year, with beneficiaries getting a 5% cut in taxes on their Social Security. Single filers and couples filing jointly are exempt from having their Social Security benefits taxed if their AGIs are less than $44,460 and $59,960, respectively. Nebraska: Nebraska’s Social Security income tax rate ranges from 2.46% to 6.84%.Montana uses a different method than the federal government to calculate the amount that someone owes (the state tax form provides a worksheet). This is not the case for residents in higher income brackets. Just as with the federal tax, retirees with an AGI of less than $25,000 (single filer) or $32,000 (married filing jointly) will not be subject to a tax on their Social Security benefits. Montana: In Montana, the Social Security income tax rate ranges from 1% to 6.9% for the 2021 tax year, with the top marginal tax rate being lowered to 6.75% starting in 2022.Those in higher income brackets may still qualify for a partial deduction. Single filers and couples filing jointly who are age 62 and older with AGIs of less than $85,000 and $100,000, respectively, will be able to fully deduct their Social Security benefits. Missouri: Although Missouri’s Social Security income tax rate can be as high as 5.4%, the range also goes as low as 0%.Minnesota’s Social Security income tax ranges from 5.35% to 9.85%. Single filers and couples filing jointly with AGIs of at least $64,670 and $85,970, respectively, only qualify for partial exemption, while those with incomes above $85,9700 and $110,020, respectively, are not eligible. This is unavailable for residents in a higher income bracket. In 2022, single filers and couples filing jointly can exempt up to $4,260 and $5,450, respectively, of their federally taxable benefits from their Minnesota income. Additionally, those who do owe taxes on their benefits can take advantage of Minnesota’s Social Security Subtraction to secure a partial deduction. Minnesota: Minnesota uses the same thresholds as the federal government for determining how much of a retiree’s Social Security benefits should be taxed.However, retirees with an AGI of up to $75,000 are exempt from paying state taxes on their Social Security income, regardless of their filing status. Kansas: In Kansas, Social Security benefits are taxed at the same rate as all other forms of income, with the tax rate ranging from 3.1% to 5.7%.Above these thresholds, 75% of Social Security benefit payments are still tax-exempt. Specifically, beneficiaries will pay no state taxes on their benefits if their AGI is less than $75,000 ( single filer) or $100,000 ( married filing jointly). Depending on their AGI and filing status, retirees are able to deduct most or all of their benefit income. Connecticut: Connecticut’s Social Security income tax rate ranges from 3% to 6.99%.
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