As the 2024 Election approaches, many American retirees are closely watching how Social Security will be handled by the candidates. Among the key issues is the taxation of Social Security benefits. According to the Social Security Administration, about 40% of Social Security recipients pay federal income taxes on their benefits. This generally happens when retirees have other sources of income, such as a pension, interest from investments, or wages from part-time work, in addition to their Social Security payments.

In light of this, Republican candidate Donald Trump has proposed a plan to eliminate the taxes on Social Security benefits. While this could provide much-needed relief to retirees, the impact of this plan could vary depending on where people live. Some states have higher overall tax burdens, including state income taxes on Social Security benefits, while others only tax Social Security at the federal level.

For retirees who live in states with high federal tax burdens, Trump’s proposal could mean significant savings. Here’s a look at six states where retirees could benefit the most from the elimination of Social Security taxes.

1. Florida: A State with No State Income Tax

Florida is a popular destination for retirees, and one of the reasons is that it has no state income tax. This means that in Florida, Social Security benefits are not taxed at the state level. If Trump’s plan to eliminate federal taxes on Social Security goes through, Florida retirees could see even more of their Social Security income stay in their pockets. This could be especially helpful for those who rely heavily on Social Security for their income.

2. Texas: Another State with No State Income Tax

Similar to Florida, Texas also doesn’t have a state income tax, which already gives retirees an advantage when it comes to their Social Security benefits. By eliminating the federal tax on Social Security, retirees in Texas could enjoy even greater savings. With no state income tax and a possible reduction in federal taxes, Texas could become an even more attractive place for retirees to settle.

3. Wyoming: Low Taxes and High Savings for Retirees

Wyoming is another state where retirees could benefit from Trump’s tax plan. Like Texas and Florida, Wyoming does not tax Social Security benefits at the state level. Additionally, Wyoming is known for its low overall tax burden. If federal taxes on Social Security benefits are eliminated, retirees in Wyoming could save a significant amount of money. The combination of low taxes and the potential federal tax cut could make Wyoming one of the best states for retirees looking to stretch their Social Security benefits.

4. Nevada: No State Income Tax and a Favorable Tax Environment

Nevada is another state where retirees could see big savings if Trump’s proposal is passed. With no state income tax, Nevada already offers retirees a tax-friendly environment. If the federal tax on Social Security benefits is eliminated, retirees could keep even more of their money. Additionally, Nevada’s overall cost of living is relatively low, making it a great option for retirees looking to maximize their savings.

5. South Dakota: Low Taxes and a Retirement-Friendly Environment

South Dakota is known for its low taxes and favorable environment for retirees. Like other states on this list, South Dakota does not tax Social Security benefits. In fact, the state has one of the lowest overall tax burdens in the country. If federal taxes on Social Security are removed, retirees in South Dakota could see a substantial increase in their disposable income. This, combined with the state’s low cost of living, makes South Dakota a great place for retirees to enjoy their Social Security benefits without the burden of high taxes.

6. Tennessee: A State That Only Taxes Interest and Dividends

Tennessee is unique in that it does not tax earned income or Social Security benefits. Instead, the state only taxes interest and dividends, which means that retirees who rely on Social Security as their primary source of income could benefit greatly if federal taxes are eliminated. With no state taxes on Social Security and the possibility of eliminating federal taxes, retirees in Tennessee could keep more of their hard-earned money. Additionally, Tennessee’s overall cost of living is reasonable, making it an appealing choice for retirees.

Potential Impact of Trump’s Proposal

While Trump’s plan to eliminate taxes on Social Security could provide short-term relief for retirees, there are concerns about the long-term sustainability of the Social Security program. The Social Security Administration has warned that, without changes, the program could face a shortfall in the coming decades. Some critics argue that eliminating taxes on Social Security benefits could exacerbate this issue and lead to even more pressure on the program.

Despite these concerns, many retirees are hopeful that Trump’s proposal will help them keep more of their benefits. In states with high overall tax burdens, the elimination of federal taxes on Social Security could provide a significant financial boost, helping retirees maintain a comfortable lifestyle without the worry of high taxes.

As the election nears, Social Security will undoubtedly continue to be a key issue for many voters. Retirees in states with high taxes on Social Security benefits are particularly interested in the potential savings that Trump’s plan could offer. If passed, this proposal could help make retirement more affordable for many Americans, especially those who depend on Social Security to cover their daily expenses.

Conclusion

The possibility of eliminating taxes on Social Security benefits is a significant issue for retirees, especially those living in states with high tax burdens. While the proposal could provide much-needed relief in the short term, it’s important for retirees to consider both the potential benefits and the long-term sustainability of the Social Security program. States like Florida, Texas, Wyoming, Nevada, South Dakota, and Tennessee stand to benefit the most from the elimination of Social Security taxes, as retirees in these states could see a substantial increase in their disposable income. As Election Day approaches, this issue will likely remain a top priority for many voters, particularly retirees looking to make the most of their Social Security benefits.