Some seniors collecting Social Security will no longer need to pay taxes on their benefits, saving them as much as $170.
The law went into effect in New Mexico after governor Michelle Lujan Grisham sign the bill.
The bill made it so seniors earning less than $100,000 do not need to pay state taxes on Social Security benefits.
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If you’re a couple collecting benefits, you don’t need to pay state taxes if you make under $150,000.
The ending of state taxes on Social Security could save seniors around $710 yearly.
Before this, the threshold for paying taxes was $25,000 for single beneficiaries and $32,000 for couples.
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States that tax residents Social Security benefits
Depending on your income, the following states tax their residents who collect Social Security benefits
- New Mexico
- Rhode Island
- West Virginia
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Federal taxes vs. state taxes on benefits
State and federal taxes are not the same, so just because your state doesn’t tax you does not mean you aren’t expected to pay federal taxes.
It depends on your income.
If your provisional income is over $25,000 individually or $32,000 jointly, you may pay taxes on up to 50% of your benefits.
If it’s past $34,000 or $44,000 respectively, you may pay taxes on up to 85%.
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