Any adult living in the United States knows about paying taxes. We pay taxes to the federal government on our income, and we also pay income taxes in our state too, depending on where we live. We pay taxes on our homes, and we may also have to pay taxes on our vehicles. We pay taxes on the items we purchase, and in some states, a gas tax is also applied.
Social Security benefits are also taxable. Across the nation, up to 85% of your benefits can be taxed by the federal government. In some states, a state tax is also applied. Of the 50 states, 13 states tax Social Security benefits. Those states are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.
If you live in one of these states or planned to move to one of these states for retirement, this extra tax on Social Security benefits may throw up a red flag. However, many of the states on this list have been ranked as some of the most tax-friendly states for retirees when considering other types of state taxes, including sales tax, property tax, estate tax, and inheritance tax.