Social Security benefits are crucial for retirement security, yet retirees often face the surprise of potential taxation on these benefits, both federally and at the state level. While 41 states and the District of Columbia do not tax Social Security, nine states impose taxes, though most offer exemptions or credits based on income. Notable changes include Missouri eliminating its Social Security tax by 2025 and West Virginia phasing it out by 2026. Understanding these tax implications is vital for retirees as they plan their finances in an era of rising living costs.
Retirement dreams are built on financial security, and for many, Social Security benefits are the cornerstone. However, many retirees are shocked to find that their benefits can be taxed, both federally and at the state level.
While most states do not levy taxes on Social Security payments, those that do often provide income-based exemptions. Notably, Missouri will phase out its Social Security taxation by 2025, and West Virginia plans to eliminate it entirely by 2026.
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