Social Security taxes are a hot topic for beneficiaries nationwide, as any changes directly affect their monthly benefits. Recently, Kansas has joined the list of states that no longer tax Social Security benefits for seniors. This new tax rule went into effect last week, providing significant relief for Kansas residents who receive Social Security payments.
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New Tax Rule in Kansas
Kansas now exempts Social Security benefits from state taxes, joining several other states with similar exemptions. This change is expected to benefit many seniors who rely on Social Security as a primary source of income. The move was praised by Glenda DuBoise, AARP Kansas State Director, who credited Gov.
Kelly and legislative leadership for their efforts in passing the bill. DuBoise highlighted that while the new rule is not perfect, it offers substantial relief and ensures funding for public services like schools, roads, bridges, and the State Water Plan.
Social Security Taxes in the U.S.
Social Security benefits are subject to federal taxes regardless of the state. However, state taxes on these benefits vary. Recently, West Virginia also eliminated state taxes on Social Security income. Now, only nine states continue to tax Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Income Considerations
According to Alex Beene, a financial literacy instructor at the University of Tennessee, most people receiving Social Security have seen a significant decline in their income due to retirement or reduced working hours. This decline lowers the likelihood of being taxed. Nonetheless, in today’s rising cost environment, every dollar counts. Planning for potential Social Security taxes remains important.
Other States Eliminating Taxes
Missouri and Nebraska have also passed laws to stop taxing Social Security income this year. Historically, some states have imposed taxes based on income thresholds. For instance, West Virginia taxed benefits for those with an adjusted gross income over $50,000. Kansas had a similar rule, taxing those with an income of $75,000 or more.
Federal Social Security Taxes
On a federal level, single filers with a combined income over $25,000 and couples earning more than $32,000 must pay Social Security taxes. As financial experts suggest, eliminating Social Security taxes at the state level may become increasingly important as more Americans reach retirement age and need to maximize their resources to cover essential needs.
Future Implications
Alex Beene noted that many seniors struggle to afford retirement due to insufficient savings in retirement accounts like 401Ks and IRAs, coupled with inflation. He believes that if Kansas’s move proves popular, other states might follow suit to provide similar relief to their residents.
Kansas’s decision to eliminate state taxes on Social Security benefits marks a significant relief for seniors, ensuring more of their income stays in their pockets. This change reflects a growing trend as more states consider the financial needs of their aging populations. With the cost of living rising, such measures are crucial in helping seniors maintain financial stability in retirement.
FAQs
What changes were made to Social Security taxes in Kansas?
Kansas no longer taxes Social Security benefits for seniors.
When did the new Kansas tax rule take effect?
The rule went into effect last week.
Are Social Security benefits subject to federal taxes?
Yes, they are subject to federal taxes regardless of the state.
Which states still tax Social Security benefits?
Nine states, including Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
What income levels require federal Social Security taxes?
Single filers with a combined income over $25,000 and couples earning more than $32,000.
