How to Pay NO TAXES on Social Security | Five Simple Strategies

This video discusses five simple strategies on how to pay no taxes on Social Security by using simple exceptions to Social Security tax rules. This video has the added benefit of help people reduce their traditional income so they pay lower taxes overall.

Social Security Tax Calculation Worksheet:

States that Don't Tax Social Security Payments:
Alabama (no state income tax)
Alaska
Arizona
Arkansas
Delaware
Florida (no state income tax)
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Mississippi
Nevada (no state income tax)
New Hampshire (no state income tax)
New Jersey
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota (no state income tax)
Tennessee (no state income tax)
Texas (no state income tax)
Washington (no state income tax)
Washington D.C.
Wisconsin
Wyoming (no state income tax)

Other Important Links:

Free "Retirement Ready" Checklist:

Federal Reserve Board Survey of Consumer Finances:

Social Security Administration Application for Benefits

Current Social Security Cost of Living Adjustment

Social Security Payment Estimator

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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.

[cynthia]

Very helpful. You can add Colorado to the list. Effective January 1, 2023, Colorado no longer taxes Social Security income.

[pauledwards]

After listening to this video and reading all the comments, I'm about 1000% more confused than I've been in years. Thanks! Clear as mud!

[Joe_]

Bottom line is seniors who make it to retirement and who have paid taxes all their lives and are earning less than 60k a year should be exempt from paying any taxes. Government should target Amazon and get them to pay their fair share of taxes.

[genehart]

All very good. May I also point out that getting out of debt during your income years reduces the amount of money needed in retirement so you can stay below the taxable threshold.

[maxshiraz]

It's appaling that any SS payment is taxed. We are all forced into it, it's funded by your tax payments, there is no investment return and payments are extremely low compared to private retirement accounts. And they have the nerve to tax it!!

[baccaratroulette]

I retiring at 62 this 2022. Not waiting 70 coz i probably wont make it then. I dont might paying taxes as long as i see the road i drive always are well paved then i know my taxes is working for me. Thank you !!

[boblynch]

I think it is about criminal that we have to pay taxes on Social Security income.

[robertbrowning]

Glad you're making another video on HSA accounts. I found out this year that because I'm 65, my company health care will not allow me to use a HSA. Turns out that is based on an IRS rule which allows it but taxes it after 65. The company opted to not mess with (what they consider) the messy calculations and simply eliminates access to it for those of us over 65. There is with Medicare what they call a MSA account. It is taxable, but can be used for any medical bill. Being taxable eliminates the usefulness of that account in my opinion, as there is no difference in paying from the MSA or my debit card.
I have to carry some form of insurance to cover my wife, so now we have to navigate the messy and unreasonably complicate medicare/medicaid system. I am still covered by work, just no HSA at this time. But that will be phased out and it takes a while to get it sorted out. Not sure yet how it all will turn

[everetteborr]

Very thoughtful video, especially for lower income retirees.

[Happybidr]

Great video. As someone who does their own complicated taxes, I understood it all. I’m glad you mentioned rental properties and depreciation. It often makes it look like we’ve lost money each year when we actually have money coming in just fine. This is GREAT for retirees! Plus, having held onto a rental property for many years, the equity has built up there just like own home, so we’ve got several pots of money available if we need them later in life. I encourage younger viewers to consider investing in rental properties, especially ones near you (not in a distant state!).

[johngill]

Yes a Roth is a great planning tool for some people. But most people pay less tax in retirement.
And for many investors a traditional is great to take advantage of the lower tax brackets and then you use a Roth for the rest. It's not an either or but a combination of the two that works well for many

[AhJodie]

Thank you, and yes, it is always great to see YOU!

[johnscott]

A little background. Social Security used to be tax free. But other retirement accounts were not. Things like pensions and annuities. So, in 1983, the government set out to start correcting this and making it a level playing field so to speak. Since people only pay half of their tax (their employer pays the other half), they set the amount that could be taxed at 50% maximum. They set the threshold fairly high so that only 1% of retirees had to pay the tax. They deliberately did not index the threshold to inflation so that EVERYONE eventually will be paying some tax on their Social Security. Then in 1993, the chief actuary of the government did some calculations and determined that most people’s total contributions toward their benefit would only be about 15% of what they eventually received. So they could safely raise the amount subject to taxation to 85% without causing double taxation. So, whether you agree with what they did or not, know that there was method in their madness. They didn’t just make this up out of thin air.

[jaroslawakmiot]

According to 2021 IRS transcript our income for that year was : $17, 200 in wages (wife) plus $19, 800 Social Security payments ( me & wife). It makes combined income in amount of $27, 100. We have $4, 900 "leeway" to add some interest e.t.c. and still pay no federal taxes on SS benefits (nor federal taxes at all). This year we purchased $40K worth of I-bonds ( $20K in "real purchase" and $20K as mutual gifts) . So, we can redeem them in 2023 @ ca. 8% interest without a problem.😀

[seandalai]

My mom's accountant depreciated her rental property for 28 yrs. The local property values were quite high when she finally sold her rentals. She owed $55, 000 in back taxes. The loan to pay the IRS (because of her age) required a monthly payment of $1, 000. Be careful about depreciation... if you're maintaining your rentals in a robust market, depreciation might not actually be happening. !

[dalewetzel]

The North Dakota Legislature eliminated state income tax on Social Security benefits during a special session in November 2021. So, you can add ND to the list of states that do not tax Social Security benefits.

[janeforever]

You left CA off your list. They may tax everything else but they do NOT tax social security retirement benefits. YAYYYY❗‼

[Krystaldoll]

Thank you for your videos. They are very helpful.

[oldcountryman]

If you have savings that you have already payed taxes on (normal savings outside 401K or IRA), you can use that to supplement other taxable income and keep yourself in or near a zero tax bracket. I anticipate having a zero tax bill for many years into retirement until my minimum distributions push my “income” up.

[EmilyBeery]

I think it's important to stick to stocks that are immune to economic policies. I'm looking at NVIDIA and other AI stocks. It seems AI is the trajectory most companies are taking, including even established FAANG companies. Maybe there are other recommendations?