Which retirees are at risk of losing some of their social security check in 2024? How much could benefits be reduced?

Social Security beneficiaries saw their payments boosted this year by 3.2 percent thanks to the 2024 COLA. While the increase will help monthly payments keep up with the rise in the cost of living, it could mean that some recipients will have to pay more income taxes, thus reducing their overall annual benefits.

This is especially true for certain beneficiaries that live in nine states that still tax Social Security benefits in 2024. Here’s a look at which Social Security recipients will be taxed and how much.

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Which retirees are at risk of losing some of their social security check in 2024?

While the amount that Social Security beneficiaries get paid each month gets an annual increase to cope with inflation, the thresholds above which the federal government starts taxing them does not. In fact it’s been over 30 years since those levels were set which means that every year more and more Social Security beneficiaries are seeing their benefits taxed.

According to the Social Security Administration roughly 40 percent of people who get benefits pay income tax on them. That is up from less than 10 percent in 1984.

Individuals who receive Social Security benefits with incomes under $25,000, and couples filing jointly with income less than $32,000, will not pay any federal taxes on their benefits. However, individuals with income between $25,000 and $34,000 and couples filing jointly with income between $32,000 and $44,000 will have to pay federal income tax on up to 50 percent of their benefits.

Social Security beneficiaries with income above those final thresholds will have to pay federal income tax on up to 85 percent of the benefits they receive over the course of the year.

And those in nine states will also have to potentially contend with a tax bill from their state tax agency.

The state and federal tax brackets will apply to the adjust gross income that taxpayers declare on their filings.

Ten states that tax Social Security benefits and how much

More and more states have been exempting Social Security benefits from income tax. However, there remain nine that still do, but each one has its own rules. Here’s a breakdown of which beneficiaries will be taxed and how much.

Colorado

Social Security beneficiaries 65 and older are exempt. But those under 65 and who receive over $20,000 in taxable benefits on their federal income tax return will pay 4.4 percent state income tax on the amount above that threshold.

Connecticut

Regardless of the Social Security benefit amount reported on your federal income tax return, in Connecticut, up to 50 percent of your Social Security income may be subject to between 2 percent and 4.5 percent state taxes.

Kansas

Retirees in Kansas with adjusted gross income over $75,000 will owe 5.7 percent in state income taxes on the benefit amount declared on their federal income tax filings.

Minnesota

Minnesota allows taxpayers to deduct a portion of their Social Security benefits from their taxable income. Individuals with income of $69,250 or less and married couples filing jointly with income of $88,630 or less can deduct $4,560 and $5,840, respectively. Above those thresholds, the deduction is phased out gradually until those with incomes at or above $78,000 for individuals or $100,000 for married couples cannot claim a deduction. The state income tax ranges from 6.8 percent to 9.85 percent.

Montana

The state income tax ranging from 4.7 percent to 5.9 percent applies to any Social Security income reported on your federal income tax return.

New Mexico

Any Social Security income taxed by the federal government will have the state income tax of between 4.9 percent and 5.9 percent applied for retirees with adjusted gross income over $100,000 for individuals or $150,000 for married couples filing jointly.

Rhode Island

Social Security beneficiaries with incomes in excess of $101,000 for individuals or $126,250 for married couples filing jointly and who are below their full retirement age will owe from 4.75 percent to 5.99 percent in state income tax on the same portion of their benefits declared on their federal income tax return.

Utah

The Utah state tax of 4.65 percent will apply to any Social Security income taxed at the federal level for individual retirees with income over $45,000 and married couples filing jointly with income over $75,000.

Vermont

Social Security beneficiaries whose income exceeds $50,000 for individuals or $65,000 for married couples filing jointly, will owe Vermont state income tax, which ranges from 3.35 percent to 8.75 percent, on a portion of their Social Security income declared on their federal income tax return.

The above states will be taxing Social Security benefits in 2024, but Social Security beneficiaries should be aware that two state were recently removed from the list Missouri and Nebraska. The former enacted a bill in July 2023 to exempt Social Security benefits, while the latter has been phasing out taxes on benefits with 2024 the first year they won’t be taxed. That means Social Security beneficiaries in those two states will have to declare benefits according to thier state’s rules when they file 2023 tax returns this year.