Taxing Social Security Benefits

  • October 01, 2013
  • By Sandy Johnson

The 14 states that tax Social Security benefits collect almost $1 billion a year from seniors.

A new study released Tuesday by AARP shows the federal government collected $45.9 billion in taxes on Social Security income in 2011. Only a handful of states tax those retirement benefits, and AARP estimated the state take at $948 million a year.

The five highest state tax collections on Social Security benefits, according to AARP research, are:
  1. Minnesota $245 million
  2. New Mexico $92 million
  3. Utah $89 million
  4. Nebraska $82 million
  5. Kansas $74 million
About 1 out of 6 Americans—57 million people—received $774.6 billion in Social Security benefits in 2012. The AARP research also estimated nationwide economic output from seniors spending their Social Security checks at $1.4 trillion and 9.2 million jobs.