Retirement Social Security

Moving to a State With No Income Tax? Here’s the Social Security Catch

A new address may not lower your Social Security tax bill

By Kristin Hitchcock , Edited by Laura Hohenstein

Updated Nov. 15, 2026

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Moving to a no-income-tax state may leave you with a smaller state tax bill. Your federal taxes are another matter. Depending on your income, up to 85% of your Social Security benefits could still be included in taxable income after the move.

That's an expense to account for before deciding how much house you can afford or how much to withdraw from savings. The new senior deduction offers some relief, but it didn't repeal federal taxes on benefits. If you're moving to save money in retirement, here's what affects the amount you might actually keep.

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"85% taxable" doesn't mean an 85% tax rate

The IRS isn't taking 85 cents out of every benefit dollar. That percentage describes how much of your Social Security could be included in income.

Suppose you're single and receive $30,000 in Social Security, take $25,000 in taxable IRA withdrawals, and earn $1,000 in tax-exempt interest. With no other income or adjustments, your combined income is $41,000. Under the IRS formula, $10,450 of your benefits would be included in income. Moving to another state wouldn't change that federal calculation.

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Combined income includes more than your pension

The calculation generally starts with your adjusted gross income before Social Security, adds tax-exempt interest, then adds half your annual benefits.

Suppose you receive $30,000 in Social Security, take $25,000 in taxable IRA withdrawals, and earn $1,000 in tax-exempt interest. With no other income or adjustments, your combined income is $41,000. Even interest advertised as tax-free belongs in this calculation.

The thresholds depend on your filing status

These are the federal combined-income thresholds:

Filing status	No benefits included	Up to 50% included	Up to 85% included
Single	$25,000 or less	Over $25,000 through $34,000	Over $34,000
Married filing jointly	$32,000 or less	Over $32,000 through $44,000	Over $44,000

Crossing the upper threshold doesn't immediately make 85% taxable; the amount rises according to the IRS formula. Married people filing separately who lived together during the year generally face a $0 base threshold.

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A benefit increase could mean more taxable income

Social Security benefits receive cost-of-living adjustments, but the income thresholds used to tax them don't rise with inflation. That means a larger benefit check could push more of your Social Security into taxable income, even if the increase barely covers higher household bills.

You don't have to start spending more or take an unusually large withdrawal for this to happen.

Plan IRA withdrawals around expensive years

Taking a large taxable IRA withdrawal for a down payment or moving expenses could also make more of your Social Security taxable.

Before withdrawing, compare funding the expense in one year with spreading optional withdrawals across tax years. Existing cash savings might offer another option. Required minimum distributions still need to be satisfied; taking monthly installments instead of one annual withdrawal doesn't change the annual income total.

Consider Roth conversions before benefits begin

Qualified Roth IRA withdrawals don't add to combined income. Converting traditional IRA money during lower-income years, potentially before Social Security and required withdrawals begin, could help manage future taxes.

The catch is timing: the taxable portion of a Roth conversion adds income in the conversion year. If you already collect benefits, a conversion could make more of them taxable that year. Compare the immediate cost with the potential savings later.

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Send planned charitable gifts directly from your IRA

If you already donate, a qualified charitable distribution, or QCD, may help. Starting at age 70½, eligible IRA owners may transfer money directly to qualifying charities.

A qualifying QCD stays out of income and counts toward an IRA required minimum distribution. That could keep combined income lower than taking the withdrawal yourself. The 2026 exclusion limit is $111,000 per person. You can't also claim a charitable deduction for the excluded amount.

Claim the senior deduction if you qualify

For 2025 through 2028, the new senior deduction provides up to $6,000 per eligible person age 65 or older, including eligible itemizers. Married taxpayers must file jointly; two qualifying spouses could deduct $12,000. Phaseouts begin above $75,000 in modified adjusted gross income, or $150,000 jointly.

It reduces taxable income after the Social Security calculation. It doesn't lower combined income or change the taxable share of benefits, though it could reduce or eliminate the resulting federal income tax.

Compare the taxes you'd actually pay after moving

Property and sales taxes could absorb part of your income tax savings.

Texas, for example, charges a 6.25% state sales tax, with local taxes bringing the combined rate to as much as 8.25%. For a home purchase, get a property tax estimate based on your eligibility for exemptions. In Florida, reassessment after a sale could leave you paying more than the previous owner.

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Bottom line

Moving to a no-income-tax state could lower your tax bill, but it doesn't erase federal taxes on Social Security. Your income, withdrawals, and available deductions still matter, along with the property and sales taxes at your new address.

Build two versions of your retirement plan: one for the moving year and another for a typical year afterward. Separating one-time expenses and extra withdrawals from ongoing costs gives you a clearer picture of whether the move actually makes retirement more affordable.

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