Trump Wants To Eliminate Social Security Taxes: 6 States Where Retirees Might Save the Most

As Election Day quickly approaches, many retired Americans are voting with Social Security issues top of mind. 

According to the Social Security Administration, “About 40% of people who get Social Security must pay federal income taxes on their benefits. This usually happens if you have other substantial income in addition to your benefits.”

Republican candidate Donald Trump has presented an economic plan to eliminate that tax. Some retirees might expect to receive short-term relief through this plan, particularly those who live in states where federal taxes are a bigger share of their overall tax burden — i.e., the only taxes on Social Security are at the federal level.

Notwithstanding a potential shortfall in the Social Security fund, GOBankingRates examined states where the elimination of Social Security taxes might allow retirees to keep more of their money.

• State sales and average local tax: 1.76%
• State tax on Social Security: None
• Effective property tax: 1.02%
• Income tax rate (65+): 0%

Alaska, which has already been described as being very tax friendly to retirees, would maintain this reputation and allow retirees to keep saving money if Social Security taxes were eliminated. There is no personal income tax in Alaska. According to the State of Alaska, a portion of your monthly retirement benefits may even be eligible to be tax excludable.

• State sales and average local tax: 0%
• State tax on Social Security: None
• Effective property tax: 0.59%
• Income tax rate (65+): 4.53%

Retirees in Delaware hear the word “no” in all the right places. There’s no state, Social Security, sales, estate or inheritance tax. Retirees are also often encouraged to start businesses in Delaware for additional tax benefits.

• State sales and average local tax: 7.02%
• State tax on Social Security: None
• Effective property tax: 0.91%
• Income tax rate (65+): 0%

Florida already has an excellent reputation as a popular state to retire in, but add in the possibility of being able to save more money and watch as retirees relocate by the dozens. There’s no state income, estate or inheritance tax in Florida.

• State sales and average local tax: 7.07%
• State tax on Social Security: None
• Effective property tax: 0.65%
• Income tax rate (65+): 3.89%

Previous GOBankingRates data has shown that Mississippi requires about $61,315 annually as the cost of a comfortable retirement. Retirees would enjoy the opportunity to live comfortably and save more money afforded to them in Mississippi, a state that exempts all retirement income.

• State sales and average local tax: 7.43%
• State tax on Social Security: None
• Effective property tax: 0.56%
• Income tax rate (65+): 3.79%

There are a lot of advantages to retiring in South Carolina, such as not having your retirement benefits taxed and enjoying low property taxes. The state also offers retirees taxable income deductions if they receive any other type of retirement income.

• State sales and average local tax: 5.36%
• State tax on Social Security: None
• Effective property tax: 0.56%
• Income tax rate (65+): 0%

If Social Security tax were eliminated, retirees in Wyoming would be able to put away a substantial amount of savings. Wyoming doesn’t have state income tax or tax on Social Security benefits. The state also offers retirees low property tax and sales tax rates.

Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

All data is accurate as of May 28, 2024.