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RI May Lift Tax on Social Security Disability

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Rhode Island may join 27 other states in eliminating state income tax on Social Security benefits, including Social Security Disability (SSD). Currently, Rhode Island is one of only six states that taxes SSD benefits the way these benefits are taxed by the federal government. The other states in this category are Minnesota, Nebraska, North Dakota, Vermont and West Virginia.

Other states either have no income tax at all (nine states) or have some combination of exemptions and income thresholds and credits that vary tax liability (eight states). In short, whether you pay state tax on SSD income depends on where you live.

The states that tax SSD benefits with certain exemptions are a patchwork on maps of the United States:

  • Connecticut
  • Kansas
  • Missouri
  • Colorado
  • Utah
  • Montana
  • New Mexico
  • Iowa

Iowa, however, will increase its exemption for SSD and other forms of Social Security benefits to 100 percent in 2014, thus removing it from the list of states where SSD benefits could be taxed.

If the legislation pending in Rhode Island passes, nearly 60,000 taxpayers will see their tax liability reduced. The bill, sponsored by Republican state representative Patricia Morgan, is intended to encourage seniors to remain in the state rather than moving to a no-tax state such as Florida. However, it will also help disabled workers retain more of the benefits they receive from SSD.

If you live in Rhode Island or anywhere else in the United States and territories and are having problems with your claim for SSD benefits, do what so many others have done: Contact Binder & Binder®, America's most successful Social Security Disability advocates. Tell them your story and find out how they can help you.

Source: Providence Journal, "Legislation would exempt social security benefits from R.I. income tax," Jan. 28, 2014.

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