What States Do Not Tax Your Pension or Social Security (9 States List)
POINTS
-
Nine states have no state income tax, making them especially tax-friendly for retirees.
-
Most states don’t tax Social Security benefits, while only a few still do.
-
Pension income may be fully exempt, partially exempt, or fully taxable depending on the state.
-
Federal taxes can still apply to Social Security, pensions, and traditional retirement accounts.
-
Property taxes and cost of living can have a bigger impact than income taxes alone.
-
The best retirement state offers a balance of low taxes, affordability, and quality of life.
Where you live in retirement can affect how much of your retirement income you keep after taxes.
States don’t all treat pensions and Social Security benefits the same, and those differences can influence retirement planning and relocation decisions.
Each state sets its own tax rules for retirement income, which can change the amount you owe in state income taxes.
Retirement Planning Tool
Where Retirees Keep More of Their Money
Tap or hover any state to see how it treats retirement income — wages, Social Security, and pensions/IRAs.
How to read this map: "Ultra-friendly" states tax none of your income, Social Security, or pension/IRA withdrawals. Friendliness decreases as more of these income types become taxable. States shown in gray were not included in this dataset. This reflects statutory tax treatment only — it does not account for property taxes, sales taxes, or individual exemptions/deductions, which can meaningfully change your real-world tax bill.
Full State Data
| State | Income Tax | SS Tax | Pension/IRA | Level |
|---|
| State | Income Tax | Social Security Tax | Pension / IRA Tax | Retirement Friendliness |
|---|---|---|---|---|
| Alaska | No | No | No | Ultra-friendly |
| Florida | No | No | No | Ultra-friendly |
| Nevada | No | No | No | Ultra-friendly |
| New Hampshire | No wage tax | No | No | Ultra-friendly |
| South Dakota | No | No | No | Ultra-friendly |
| Tennessee | No | No | No | Ultra-friendly |
| Texas | No | No | No | Ultra-friendly |
| Wyoming | No | No | No | Ultra-friendly |
| Washington | No | No | No | Very friendly |
| Illinois | Yes | No | No | Very friendly |
| Pennsylvania | Yes | No | No | Very friendly |
| Mississippi | Yes | No | No | Very friendly |
| Iowa | Yes | No | No | Very friendly |
| New York | Yes | No | Partial | Good |
| New Jersey | Yes | No | Partial | Good |
| Maryland | Yes | No | Partial | Good |
| North Carolina | Yes | No | Partial | Good |
| South Carolina | Yes | No | Partial | Good |
| Georgia | Yes | No | Partial | Good |
| Arizona | Yes | No | No exemption | Moderate |
| California | Yes | No | Yes | Mixed |
| Minnesota | Yes | Yes | Yes | Lower friendliness |
| Colorado | Yes | Yes | Yes | Lower friendliness |
| Connecticut | Yes | Yes | Yes | Lower friendliness |
| Montana | Yes | Yes | Yes | Lower friendliness |
| New Mexico | Yes | Yes | Yes | Lower friendliness |
| Rhode Island | Yes | Yes | Yes | Lower friendliness |
| Utah | Yes | Yes | Yes | Lower friendliness |
| Vermont | Yes | Yes | Yes | Lower friendliness |
States With No Personal Income Tax
The most tax-friendly states are those that do not levy a personal income tax at all.
Because there is no state income tax, retirement income, including pensions, traditional IRA distributions, 401(k) withdrawals, and Social Security benefits, is generally not taxed at the state level.
These states do not tax any income at all, including retirement income.
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Important Note
Washington has no broad personal income tax. But, unlike the other states commonly listed as income tax-free, it imposes a state tax on certain high-value capital gains. So, retirees with large investment portfolios may face taxes that don’t apply in many other no-income-tax states.
States That Fully Exempt Retirement Income
Several states impose an income tax but exempt most or all common forms of retirement income.
Depending on the state, exemptions may apply to Social Security benefits, pensions, IRA withdrawals, annuities, or employer-sponsored retirement plans.
| State | State Income Tax Rate | What Is Fully Exempt |
|---|---|---|
| Illinois | 4.95% flat |
|
| Iowa | ~3.8–3.9% flat |
|
| Mississippi | ~4.0% flat |
|
| Pennsylvania | 3.07% flat |
|
| Source: https://taxfoundation.org/data/all/state/state-income-tax-rates/ | ||
For retirees, these states can offer tax outcomes comparable to states with no income tax while maintaining different overall tax structures.
States Offering Partial Retirement Tax Exemptions
Many states fall somewhere in the middle by allowing retirees to exclude a portion of their retirement income.
These exemptions frequently depend on factors such as age, filing status, income level, or the source of retirement benefits.
| State | Retirement Income Tax Status | What Is Exempt / Partially Exempt |
|---|---|---|
| Alabama | Partial exemption |
|
| Louisiana | Partial exemption |
|
| Maryland | Partial exemption |
|
| New Jersey | Partial exemption |
|
| New York | Partial exemption |
|
| North Carolina | Partial exemption |
|
| Rhode Island | Partial exemption |
|
| South Carolina | Partial exemption |
|
https://www.moaa.org/content/state-report-card/statereportcard/
States That Tax and Do Not Tax Social Security
Although the vast majority of states exempt Social Security benefits entirely, a small number continue to tax benefits under certain circumstances.
States That DO Tax Social Security Benefits
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
States That Fully Exempt Social Security
- Alabama
- Arizona
- Arkansas
- California
- Delaware
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Missouri
- Nebraska
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington
- West Virginia (fully phased out by 2026)
- Wisconsin
- Wyoming
- Washington, D.C.
42 states do not impose any tax on Social Security, and only the ones listed below do.
For example, if you reside in California, New York, or Ohio, your Social Security checks are entirely tax-free under state law.
Federal Taxes vs. State Taxes
State |
State Tax
(Income Tax Rate)
|
Federal Tax
(Marginal Bracket Range)
|
|---|---|---|
| Alabama | up to 5.0% | 10%–37% |
| AlaskaNo State Tax | 0% | 10%–37% |
| Arizona | 2.5% | 10%–37% |
| Arkansas | up to 4.9% | 10%–37% |
| California | up to 13.3% | 10%–37% |
| Colorado | 4.4% | 10%–37% |
| Connecticut | up to 6.99% | 10%–37% |
| Delaware | up to 6.6% | 10%–37% |
| FloridaNo State Tax | 0% | 10%–37% |
| Georgia | 5.0% | 10%–37% |
| Hawaii | up to 11.0% | 10%–37% |
| Idaho | 5.8% | 10%–37% |
| Illinois | 4.95% | 10%–37% |
| Indiana | 3.15% | 10%–37% |
| Iowa | 3.8% | 10%–37% |
| Kansas | up to 5.7% | 10%–37% |
| Kentucky | 4.5% | 10%–37% |
| Louisiana | 4.25% | 10%–37% |
| Maine | up to 7.15% | 10%–37% |
| Maryland | up to 5.75% | 10%–37% |
| Massachusetts | 5.0% | 10%–37% |
| Michigan | 4.25% | 10%–37% |
| Minnesota | up to 9.85% | 10%–37% |
| Mississippi | 4.0% | 10%–37% |
| Missouri | up to 4.95% | 10%–37% |
| Montana | up to 5.9% | 10%–37% |
| Nebraska | up to 6.64% | 10%–37% |
| NevadaNo State Tax | 0% | 10%–37% |
| New HampshireNo State Tax | 0% | 10%–37% |
| New Jersey | up to 10.75% | 10%–37% |
| New Mexico | up to 5.9% | 10%–37% |
| New York | up to 10.9% | 10%–37% |
| North Carolina | 4.5% | 10%–37% |
| North Dakota | up to 2.5% | 10%–37% |
| Ohio | up to 3.5% | 10%–37% |
| Oklahoma | up to 4.75% | 10%–37% |
| Oregon | up to 9.9% | 10%–37% |
| Pennsylvania | 3.07% | 10%–37% |
| Rhode Island | up to 5.99% | 10%–37% |
| South Carolina | up to 6.4% | 10%–37% |
| South DakotaNo State Tax | 0% | 10%–37% |
| TennesseeNo State Tax | 0% | 10%–37% |
| TexasNo State Tax | 0% | 10%–37% |
| Utah | 4.65% | 10%–37% |
| Vermont | up to 8.75% | 10%–37% |
| Virginia | up to 5.75% | 10%–37% |
| WashingtonNo State Tax | 0% | 10%–37% |
| West Virginia | up to 5.12% | 10%–37% |
| Wisconsin | up to 7.65% | 10%–37% |
| WyomingNo State Tax | 0% | 10%–37% |
U.S. income tax is split into two layers:
- A uniform federal system and state-level systems that differ widely by location.
- Federal income tax is progressive, with rates increasing as income rises across multiple brackets from low to high earners.
State income taxes are not uniform; some states do not levy any income tax, some apply a single flat percentage, and others use progressive brackets with varying top rates.
How to Choose the Best State for Your Retirement?
Rather than focusing only on taxes, you need to evaluate each state using a structured approach that balances your finances, healthcare needs, and lifestyle goals.
Step 1: Estimate Your Retirement Income
Before comparing states, determine where your retirement income will come from.
- Social Security benefits
- Pension payments
- Traditional IRA withdrawals
- 401(k) distributions
- Roth IRA withdrawals
- Investment income
- Part-time work or business income
Step 2: Compare How Each State Taxes Retirement Income
Next, review each state’s treatment of retirement income.
Pay particular attention to whether the state taxes:
- Social Security benefits
- Pension income
- Traditional IRA withdrawals
- 401(k) distributions
- Investment income
Some states impose no personal income tax at all, while others exempt certain retirement income but tax other distributions.
Step 3: Calculate Your Total State Tax Burden
Apart from income tax, you also need to compare:
- Property taxes
- Sales taxes
- Local income taxes
- Estate or inheritance taxes
- Vehicle registration fees
A state with no income tax may offset that advantage with higher property or sales taxes, so calculate your overall tax picture rather than focusing on a single tax.
Step 4: Compare the Cost of Living
A state may be tax-friendly but have high housing costs. Research the state’s:
- Home prices or rental costs
- Utility expenses
- Grocery prices
- Transportation costs
- Insurance premiums
- Overall cost-of-living index
Step 5: Check Healthcare Access
Healthcare expenses usually increase throughout retirement. You need to make medical care a major consideration for retirement.
Compare the states:
- Hospital quality
- Availability of specialists
- Primary care access
- Medicare Advantage plan options
- Long-term care facilities
- Average healthcare costs
Step 6: Think About Climate and Lifestyle
Yes, taxes and financial factors are important, but your retirement state should also match the lifestyle you want.
You wouldn’t want to retire, saving tons of taxes in a city with weather that doesn’t suit you.
Ask yourself:
- Do you prefer warm weather or four seasons?
- Would you rather live near the beach, mountains, or countryside?
- Do you want access to golf courses, parks, or cultural attractions?
- How important are restaurants, shopping, and entertainment?
- Do you prefer an urban, suburban, or rural community?
Step 8: Stay Close to Family and Support Networks
Many retirees place a high value on remaining close to family and friends.
- Distance from children and grandchildren
- Availability of caregivers
- Social support networks
- Travel costs for visiting loved ones
So, you being near trusted support systems can become increasingly valuable over time.
Step 10: Compare Your Final Shortlist
Once you’ve narrowed your options, compare each state side by side using the same criteria.
| Factor | Questions to Ask |
|---|---|
| Retirement taxes | Does the state tax Social Security, pensions, or retirement account withdrawals? |
| Cost of living | Can my retirement income comfortably cover everyday expenses? |
| Housing | Are home prices, insurance, and property taxes affordable? |
| Healthcare | Are quality hospitals and specialists readily available? |
| Climate | Will I enjoy living here year-round? |
| Family | How close am I to family and friends? |
| Lifestyle | Does the area support the retirement lifestyle I want? |
Using the above process, rank states by tax-friendliness first, then adjust for healthcare or family ties.
Always verify current state tax laws and factor in personal priorities before deciding where you wanna retire.
Tax Friendly States FAQs
Yes. A few states do: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont (West Virginia is phasing out taxation). Most states do not tax Social Security. Some offer income-based exemptions.
It depends on the state. Some tax them as regular income, some fully or partially exempt them, and a few (Florida, Texas, Washington) have no state income tax at all. Rules vary widely by state.
Yes. Up to 85% of Social Security may be taxable depending on income. Pension, IRA, and 401(k) withdrawals are generally fully taxable as federal ordinary income.
Federal taxation does not change. State taxation depends on your residency. Moving to a no-income-tax state can eliminate state tax once residency is established.
Usually yes. Most states tax retirement withdrawals as income. States that exempt pensions often include IRA and 401(k) withdrawals in that exemption.
No. States like Florida, Texas, Washington, Alaska, South Dakota, Nevada, Wyoming, New Hampshire, and Tennessee do not tax retirement income because they have no state income tax.
A fixed amount of retirement income is excluded from tax. For example, the first $20,000 may be tax-free, with amounts above that taxed. Rules vary by state.
Estate tax is paid by the estate before assets are distributed. Inheritance tax is paid by the person receiving the assets. They are separate from income tax and vary by state.
Sometimes. Lower-tax states may have higher housing or healthcare costs. Tax savings should be weighed against overall living expenses.
Regularly. States frequently adjust retirement income rules and Social Security taxation. Always verify current rules before making financial or relocation decisions.
References:
