States That Don't Tax Retirement Income
Choosing where to retire can have a dramatic impact on your tax bill. Some states impose zero tax on retirement income, while others tax pensions, Social Security, and 401(k) withdrawals at rates exceeding 10%. Understanding these differences is essential for retirement planning.
- Alaska — No income tax at all
- Florida — No income tax at all
- Nevada — No income tax at all
- New Hampshire — No tax on earned or retirement income
- South Dakota — No income tax at all
- Tennessee — No income tax at all
- Texas — No income tax at all
- Washington — No income tax (7% capital gains tax applies to investment gains)
- Wyoming — No income tax at all
- Illinois — Has income tax (4.95%) but exempts all retirement income
- Iowa — Has income tax (3.80%) but fully exempts retirement income as of 2023
- Mississippi — Has income tax (4.70%) but exempts all retirement income
- Pennsylvania — Has income tax (3.07%) but exempts all retirement income
All 50 States: Retirement Income Tax Treatment
The table below shows how each state treats the four main types of retirement income: Social Security benefits, public pensions (government employee), private pensions (employer plans), and 401(k)/IRA withdrawals.
| State | Social Security | Public Pension | Private Pension | 401(k)/IRA | Retiree Rating |
|---|---|---|---|---|---|
| Alabama | Exempt | Exempt | Exempt | Taxed | Good |
| Alaska | Exempt | Exempt | Exempt | Exempt | Excellent |
| Arizona | Exempt | $2,500 exemption | $2,500 exemption | Taxed (2.5%) | Good |
| Arkansas | Exempt | $6,000 exempt | $6,000 exempt | $6,000 exempt | Fair |
| California | Exempt | Taxed (up to 13.3%) | Taxed (up to 13.3%) | Taxed (up to 13.3%) | Poor |
| Colorado | Partially taxed | $24,000 exempt (65+) | $24,000 exempt (65+) | $24,000 exempt (65+) | Fair |
| Connecticut | Partially taxed | Taxed | Taxed | Taxed | Poor |
| Delaware | Exempt | $12,500 exempt (60+) | $12,500 exempt (60+) | $12,500 exempt (60+) | Fair |
| DC | Exempt | Taxed | Taxed | Taxed | Poor |
| Florida | Exempt | Exempt | Exempt | Exempt | Excellent |
| Georgia | Exempt | $65,000 exempt (62+) | $65,000 exempt (62+) | $65,000 exempt (62+) | Good |
| Hawaii | Exempt | Exempt (public) | Taxed (up to 11%) | Taxed (up to 11%) | Fair |
| Idaho | Exempt | Taxed (5.8%) | Taxed (5.8%) | Taxed (5.8%) | Fair |
| Illinois | Exempt | Exempt | Exempt | Exempt | Excellent |
| Indiana | Exempt | Taxed (3.05%) | Taxed (3.05%) | Taxed (3.05%) | Fair |
| Iowa | Exempt | Exempt | Exempt | Exempt | Excellent |
| Kansas | Exempt (under $75K AGI) | Exempt (public) | Taxed | Taxed | Fair |
| Kentucky | Exempt | $31,110 exempt | $31,110 exempt | $31,110 exempt | Fair |
| Louisiana | Exempt | Exempt (public) | $6,000 exempt (65+) | $6,000 exempt (65+) | Good |
| Maine | Exempt | $25,000 exempt | $25,000 exempt | Taxed | Fair |
| Maryland | Exempt | $36,200 exempt (65+) | $36,200 exempt (65+) | $36,200 exempt (65+) | Fair |
| Massachusetts | Exempt | Exempt (contributory) | Taxed (5%+) | Taxed (5%+) | Fair |
| Michigan | Exempt | Exempt (born before 1946) | Partially exempt | Partially exempt | Fair |
| Minnesota | Partially taxed | Taxed (up to 9.85%) | Taxed (up to 9.85%) | Taxed (up to 9.85%) | Poor |
| Mississippi | Exempt | Exempt | Exempt | Exempt | Excellent |
| Missouri | Exempt (under $100K) | Exempt (public) | $6,000 exempt (62+) | $6,000 exempt (62+) | Fair |
| Montana | Partially taxed | $4,640 exempt | $4,640 exempt | Taxed | Poor |
| Nebraska | Exempt (2025+) | Taxed | Taxed | Taxed | Fair |
| Nevada | Exempt | Exempt | Exempt | Exempt | Excellent |
| New Hampshire | Exempt | Exempt | Exempt | Exempt | Excellent |
| New Jersey | Exempt | $100,000 exempt (62+) | $100,000 exempt (62+) | $100,000 exempt (62+) | Good |
| New Mexico | Partially taxed | $8,000 exempt (65+) | $8,000 exempt (65+) | $8,000 exempt (65+) | Fair |
| New York | Exempt | Exempt (NY public) | $20,000 exempt | $20,000 exempt | Fair |
| North Carolina | Exempt | Taxed (4.5%) | Taxed (4.5%) | Taxed (4.5%) | Fair |
| North Dakota | Exempt | Taxed (low rates) | Taxed (low rates) | Taxed (low rates) | Fair |
| Ohio | Exempt | Credit available | Credit available | Credit available | Fair |
| Oklahoma | Exempt | $10,000 exempt | $10,000 exempt | $10,000 exempt | Fair |
| Oregon | Exempt | Credit (9% tax) | Taxed (up to 9.9%) | Taxed (up to 9.9%) | Poor |
| Pennsylvania | Exempt | Exempt | Exempt | Exempt | Excellent |
| Rhode Island | Partially taxed | Taxed | Taxed | Taxed | Poor |
| South Carolina | Exempt | $10,000 exempt (65+) | $10,000 exempt (65+) | $10,000 exempt (65+) | Fair |
| South Dakota | Exempt | Exempt | Exempt | Exempt | Excellent |
| Tennessee | Exempt | Exempt | Exempt | Exempt | Excellent |
| Texas | Exempt | Exempt | Exempt | Exempt | Excellent |
| Utah | Partially taxed | Retirement credit | Retirement credit | Retirement credit | Fair |
| Vermont | Partially taxed | Taxed (up to 8.75%) | Taxed (up to 8.75%) | Taxed (up to 8.75%) | Poor |
| Virginia | Exempt | $12,000 exempt (65+) | $12,000 exempt (65+) | $12,000 exempt (65+) | Fair |
| Washington | Exempt | Exempt | Exempt | Exempt | Excellent |
| West Virginia | Partially taxed | $2,000 exempt | $2,000 exempt | Taxed | Poor |
| Wisconsin | Exempt | Exempt (WI public) | $5,000 exempt | Taxed | Fair |
| Wyoming | Exempt | Exempt | Exempt | Exempt | Excellent |
States That Tax Social Security Benefits
Most states do not tax Social Security benefits, but 9 states still impose some level of taxation. Even within these states, many retirees pay little or no tax on Social Security due to income-based exemptions.
- Colorado — Fully exempt if 65+; partial exemption ages 55-64
- Connecticut — Exempt if AGI under $75,000 (single) / $100,000 (joint)
- Minnesota — Follows federal taxation rules with state subtraction
- Montana — Follows federal taxation rules
- New Mexico — Exempt if AGI under $100,000 (single) / $150,000 (joint)
- Rhode Island — Exempt if AGI under $101,000 (single) / $126,250 (joint)
- Utah — Retirement income tax credit offsets for lower incomes
- Vermont — Exempt if AGI under $50,000 (single) / $65,000 (joint)
- West Virginia — Phasing out Social Security tax by 2026 (65% exempt in 2025)
Best States for Retirees: Full Tax Picture
Income tax is only part of the story. The best state for your retirement depends on your total tax burden, including property tax and sales tax. Here are the top retirement-friendly states considering all taxes:
Top 5 Best States for Retirement Taxes
- Florida — No income tax, no estate tax, moderate property tax (0.86%). Sales tax at 6% + local surcharges. The most popular retirement destination in the US.
- Wyoming — No income tax, no estate tax, very low property tax (0.56%). Sales tax at 4%. Small population means fewer services but very low overall tax burden.
- Nevada — No income tax, no estate tax. Property tax at 0.53% (among the lowest). Sales tax at 6.85% + local. Las Vegas area offers extensive healthcare and entertainment.
- Texas — No income tax, no estate tax. Offset by high property taxes (1.60% average). No state income tax on any retirement income. Sales tax at 6.25% + local.
- Pennsylvania — Exempts all retirement income despite having a 3.07% flat income tax. Property tax at 1.49% (above average). No sales tax on food or clothing.
5 Worst States for Retirement Taxes
- California — Taxes all pension and 401(k) income at rates up to 13.3%. No special retirement exemptions. High property tax (0.71%) and sales tax (7.25%+).
- Minnesota — Taxes Social Security, pensions, and all retirement income. Top rate 9.85%. High property taxes.
- Vermont — Taxes Social Security and all retirement income. Top rate 8.75%. High property tax (1.83%).
- Oregon — No sales tax but taxes pensions and retirement income at up to 9.9%. Limited exemptions.
- Connecticut — Taxes Social Security (high earners), pensions, and retirement income. Top rate 6.99%. High property taxes.
Types of Retirement Income and How States Tax Them
Social Security Benefits
At the federal level, up to 85% of Social Security benefits may be taxable depending on your combined income. At the state level, 41 states and DC fully exempt Social Security from taxation. The 9 states listed above tax benefits to varying degrees, though most offer exemptions for lower-income retirees.
Pensions (Defined Benefit Plans)
Public pensions (federal, state, and local government) receive favorable treatment in many states. Some states exempt public pensions entirely while taxing private pensions. Federal government pensions (Civil Service Retirement System, FERS) are taxable by states unless a specific state exemption applies. Military pensions are fully exempt in most states.
401(k) and IRA Withdrawals
Traditional 401(k) and IRA withdrawals are generally taxed as ordinary income by most states. Roth 401(k) and Roth IRA withdrawals are tax-free at both the federal and state level (assuming qualified distributions). States that exempt retirement income, such as Illinois and Pennsylvania, exempt 401(k) and IRA withdrawals as well.
Military Retirement Pay
As of 2026, most states exempt military retirement pay from state income tax. Notable exceptions include California, which fully taxes military pensions, and Virginia, which offers only a partial exemption. If you are a military retiree, check your specific state's policy, as this area has changed rapidly in recent years.
Planning Your Retirement Location
When choosing a state for retirement, consider these factors beyond income tax:
- Property tax — Many retirees own their homes outright. States like New Jersey (2.13%) and Illinois (2.07%) have very high property taxes that can offset their retirement income exemptions.
- Sales tax — Daily purchases add up. States like Oregon (0%), Montana (0%), and New Hampshire (0%) have no sales tax at all.
- Estate and inheritance tax — Twelve states and DC impose estate taxes. Six states impose inheritance taxes. Maryland imposes both. Federal estate tax applies above $13.61 million (2024).
- Healthcare costs — Proximity to quality healthcare is essential. States with major medical centers and lower Medicare supplement costs may save more than tax-free states without good healthcare access.
- Cost of living — Low-tax states in the South and Midwest often have a much lower cost of living than tax-free states like Alaska or Washington.
Use our state comparison tool to see the full tax picture for any two states side by side, or explore our cheapest states to live guide for a complete tax burden analysis.
Frequently Asked Questions
Nine states have no income tax at all (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), so they don't tax any retirement income. Additionally, Illinois, Iowa, Mississippi, and Pennsylvania fully exempt all retirement income from state tax.
As of 2026, only 9 states tax Social Security benefits to some extent: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Most of these offer partial exemptions based on income level. The remaining 41 states and DC do not tax Social Security.
The best states for retirees from a tax perspective are those with no income tax (Florida, Texas, Nevada, Wyoming) or those that fully exempt retirement income (Illinois, Mississippi, Pennsylvania). However, consider the full tax picture including property tax and sales tax.
In most states with an income tax, yes. 401(k) and IRA withdrawals are generally treated as ordinary income. However, some states offer partial or full exemptions. Illinois, Mississippi, and Pennsylvania exempt all retirement account withdrawals. Many other states exempt a portion.