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41 States That Won’t Tax Social Security Income in 2024 (Updated)
Ghazal Ahmed
13 min read

In This Article:

This article takes a look at the 41 states that won’t tax Social Security Income in 2024. If you wish to skip our detailed analysis on navigating Social Security, you may go to 10 States That Won’t Tax Social Security Income in 2024.

On Navigating Social Security

More than 71 million beneficiaries receive Social Security and Supplemental Security Income (SSI) benefits in the United States of America. As of 2024, they were also entitled to a 3.2% Cost of Living Adjustment (COLA) to keep these benefits aligned with inflation. Albeit smaller than the 8.7% COLA that beneficiaries received back in 2023, the smaller raise implies that inflation in the country is finally witnessing some moderation.

If one perceives this year's COLA as small, the anticipation for what 2025 holds may prove even more eye-opening. Based on current inflation data, The Senior Citizens Group estimates that Social Security benefits will increase by 2.4% by 2025 only. This revelation may come as a surprise to individuals unfamiliar with the mechanics of this adjustment. Even for those well-versed in its workings, there remains a prevailing sentiment that their COLAs fall short of expectations, notwithstanding the mitigating effects of inflation.

"Social Security benefits generally do keep up with inflation, though there is a lag,"

Nevertheless, it must be noted here that Social Security isn't meant to be a complete replacement of one's retirement income. Rather, it is one of the "three-legged stools" of retirement income.

Here is what Rob from The Charles Schwab Corporation (NYSE:SCHW) further has to say about Social Security:

"If anything, these changes are a reminder that retirees' incomes aren't truly fixed. Social Security benefits can change from year to year, and retirees can and should adjust their spending as their situation and the broader economic and financial environment evolve”.

If anything can be learned from these pointers from The Charles Schwab Corporation (NYSE:SCHW), it is that Social Security mustn’t be your sole source of income in retirement. For those who are solely reliant on Social Security, things can get hard fast. Moreover, with these funds expected to be depleted by 2034, things are looking gloomy as beneficiaries expect cuts from then onward.

By the way, our website's expertise is in identifying stocks that insiders and hedge funds are piling into, and Charles Schwab is one of the those companies. Here is what one of those investors recently said about this promising stock: "Charles Schwab is notable because the business and the stock both had a challenging year. The regional banking panic in the spring of 2023 created an opportunity for us to add to our position below $50 per share. Rising interest rates have impacted the business in ways both predictable and unpredictable, but the net result has been a crimping of earnings that will likely persist for another year or two. Critically, we do not believe any of these transitory dynamics pose, or ever posed, any existential risk to the business. Further, Schwab’s enviable, high-return franchise remains, in our view, entirely intact. If we are right on both these counts, we should generate an attractive return from the current stock price across a range of long-term interest rate scenarios." SCHW shares returned nearly 40% over the past year and as long-term interest rates fall over the next 12 months, SCHW should continue to deliver positive returns. You can find other stocks with huge upside potential on Insider Monkey. Now let's go back to our discussion about the social security benefits.

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