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This is good news for California’s Social Security benefit recipients, because the state’s income tax rates are among nation’s highest, ranging from 1% to 12.3%.
For the 2024 tax year, 35% of Social Security benefits were exempt from the tax. This year, 65% of benefits are exempt, and beginning in 2026, all Social Security benefits will be exempt.
Although Social Security benefits are adjusted for inflation every year through COLAs, income tax thresholds for recipients have not changed since benefits were first taxed in 1984.
For example, in Colorado, residents ages 65 and older have been able to fully deduct federally taxed Social Security benefits on their state income tax returns since tax year 2022. For 2025, that ...
What is the Social Security tax limit for 2024? There's a limit to how much of your earnings are taxed by the Social Security Administration, at a rate of 6.2%. (Self-employed workers pay 12.4%.)
Making matters worse on the tax front is that in recent years, rampant inflation has led to higher-than-average Social Security COLAs. In 2022, benefits were eligible for a 5.9% COLA, followed by ...
As of 2023, taxes on Social Security benefits in New Mexico have been phased out for individuals earning less than $100,000 a year and married people filing jointly who earn less than $150,000.
Living on Social Security benefits alone is not easy. The average monthly benefit check in September was roughly $1,921 for retired workers, or $23,052 annually, and studies show that benefits ...