Cost of Living in the 9 States That Tax Your Social Security Benefits

Of the 50 states in the union, 41 of them do not tax the Social Security benefits of Social Security recipients. However, that leaves nine states that still do: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia. In those nine, the state can still tax a retiree or recipient’s benefits and greatly impact their cost of living.

That said, cost of living is far more affordable in some states than others. For example: Among the nine states that still tax Social Security benefits, West Virginia has an annual cost of living that is only $33,786, which is nearly half that of the most expensive state in the nine, Colorado ($62,282).

The taxation of benefits can feel far heftier in a state with a high cost of living; to that end, GOBankingRates has put together a list of the nine states in which Social Security benefits are still taxed, along with a breakdown of cost of living after Social Security is received.

• Annual cost of living: $62,282
• Annual cost of living after Social Security: $39,759

• Annual cost of living: $56,636
• Annual cost of living after Social Security: $34,113

• Annual cost of living: $47,178
• Annual cost of living after Social Security: $24,654

• Annual cost of living: $54,174
• Annual cost of living after Social Security: $31,651

• Annual cost of living: $43,499
• Annual cost of living after Social Security: $20,976

• Annual cost of living: $59,443
• Annual cost of living after Social Security: $36,920

• Annual cost of living: $60,321
• Annual cost of living after Social Security: $37,797

• Annual cost of living: $52,545
• Annual cost of living after Social Security: $30,022

• Annual cost of living: $33,786
• Annual cost of living after Social Security: $11,263

Methodology: The cost of living was sourced from the Missouri Economic and Research Information Center and includes the grocery, healthcare, housing, utilities, transportation, and miscellaneous cost of living indexes. The average single-family home value from November 2024 was sourced from Zillow Home Value Index for each state. Using the average home value, assuming a 10% down payment, and using the most recent national average 30-year fixed mortgage rate, as sourced from the Federal Reserve Economic Data, the average mortgage was calculated. The average mortgage and average expenditure costs, the average total cost of living was calculated. The average Social Security benefits for one person was sourced from the Social Security Administration’s Monthly Statistical Snapshot for November 2024. Then the monthly total cost of living after Social Security benefits was calculated. The data was collected on and is up to date as of Jan. 8, 2024.