37 States That Don't Tax Social Security Benefits

Income is the most important aspect of retirement planning, and Social Security is the biggest income source for most retirees. If you're approaching your golden years, it's wise to take inventory of your cash needs and sources of income. That planning will help you determine the best age to take Social Security benefits, how to spend down your 401(k) or IRA, and how to structure your pension payouts. You need to understand the tax implications of any retirement income decisions you make, so it's important to figure out how your state taxes Social Security.

There are seven states that have no income tax at all. If you live in any of these, you'll receive your Social Security benefits tax-free at the state level. These states are:

This is obviously attractive for anyone earning wages or receiving passive income, but it can be especially meaningful for retirees on a fixed budget. The average household spends about $48,000 per year in retirement, so that 5% to 10% saved on state income tax could easily keep an extra $400 in your pocket each month.

Source Fool.com