For many retirees, every dollar of monthly income matters. That's why a recent change in Missouri tax law may be welcome news for those receiving Social Security benefits.
Missouri now joins the majority of states that do not tax Social Security income. While this change may seem small, it could create an opportunity to improve monthly cash flow for retirees who are still having state taxes withheld from their Social Security benefits.
What's Changed?
Missouri has fully eliminated state income taxes on Social Security benefits.
This means Missouri residents receiving Social Security no longer owe Missouri state income tax on those benefits.
Missouri is now one of 42 states that do not tax Social Security income at the state level. While every state's tax laws are different, the trend has been toward providing greater tax relief for retirees and those living on fixed incomes.
Why This Matters
Many retirees elected to have taxes withheld from their Social Security benefits years ago and haven't revisited those elections since.
If Missouri state taxes are still being withheld from your Social Security payments, you may be receiving less income each month than necessary.
Reviewing your withholding elections could potentially increase your monthly cash flow without changing your overall retirement income strategy.
While the impact will vary from person to person, it's one of those simple financial housekeeping items that's easy to overlook.
How to Check Whether State Taxes Are Being Withheld From Your Social Security Benefits
If you've been receiving Social Security for several years, there's a chance your withholding elections were made before Missouri eliminated its tax on Social Security benefits.
A simple place to start is by reviewing your most recent Social Security benefit statement or checking your deposits to see whether any state tax withholding is occurring.
If you're unsure, you can also log in to your Social Security account or contact the Social Security Administration directly to review your current withholding elections.
Because Missouri no longer taxes Social Security benefits, continuing to withhold Missouri state income tax could result in less money reaching your bank account each month than necessary.
While the amount may not be significant for everyone, it's worth taking a few minutes to confirm that your withholding elections still align with current Missouri tax laws.
A Small Change That Could Improve Cash Flow
Retirement planning isn't always about making major adjustments. Sometimes it's simply about making sure your income is working as efficiently as possible.
Missouri's decision to eliminate taxes on Social Security benefits is a positive change for retirees across the state. If you haven't reviewed your withholding elections recently, now may be a good time to take a look.
Questions about retirement income, tax withholding strategies, or your overall financial plan? We're always happy to have a conversation.
-Michael
This article is intended for informational purposes only and should not be considered tax advice. Please consult with a qualified tax professional regarding your specific situation.