Are Social Security benefits taxable? You better believe it. Uncle Sam taxes up to 85% of your benefits, depending on your income, and several states tack on a state tax of their own. Vermont, for one, treats Social Security benefits the same way as the feds. Other states tax Social Security benefits only if income exceeds a state-specified threshold. For example, Connecticut taxes Social Security benefits if your income tops $50,000, or $60,000 if you're married and file taxes jointly.

A tax on Social Security doesn't necessarily make a state unsuitable for retirement. North Dakota, one of the 13 states that taxes Social Security, actually ranks as a tax-friendly state for retirees. Weigh all state taxes including other income taxes, sales taxes, property taxes, estate taxes and inheritance taxes, not to mention available tax breaks for seniors, to get a complete retirement tax picture.

Take a look at the 13 states that tax Social Security benefits.

Colorado

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State Taxes on Social Security: For beneficiaries younger than 65, up to $20,000 of Social Security benefits can be excluded, along with other retirement income. Those 65 and older can exclude benefits and other retirement income up to $24,000. Also, Social Security income not taxed by the federal government is not added back to adjusted gross income for state income tax purposes.

Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.50%.

Income Tax Range:

Sales Tax: 7% state levy. No local taxes. Clothing and footwear with an item price of $250 or less are exempt.