It’s True: These 13 States Don’t Tax Retirement Income

An 1852 government report from Vermont noted that “taxation is the price which we pay for civilization, for our social, civil and political institutions, for the security of life and property, and without which, we must resort to the law of force.”

It’s hard to argue with that, but most of us still don’t love paying taxes. Many people would even consider moving to a state that has a light taxing touch — and retirees might find that idea particularly appealing.

Image source: Getty Images.

Here are the 13 states that don’t tax retirement income — though you should never relocate purely for low or no taxes on retirement income. (I’ll explain why soon.)

The 13 states that don’t tax retirement income

Not only are there 13 states that don’t tax retirement income, but fully eight of them don’t tax income at all! (That includes even wages from your job if you’re, say, a 42-year-old salaried employee.) Here are those states:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Then there’s New Hampshire, which taxes no income except for interest and dividend income.

And now we come to the final four — states that do tax income, but exclude retirement income such as Social Security benefits, 401(k) and IRA distributions, and pension income:

• Illinois
• Iowa
• Mississippi
• Pennsylvania

There are a few important details, though. For example, the retirement income exclusion is only for those aged 55 or older in Iowa. And those in Mississippi and Pennsylvania must meet certain requirements. In Mississippi, for instance, early distributions from retirement accounts don’t qualify, and in Pennsylvania, annuity income that’s not from an employment plan doesn’t qualify. If you live in either of these states, take a closer look at their rules.

The 40 states that don’t tax Social Security benefits

The news is much better when it comes to states that don’t tax Social Security benefits, because there are a whopping 40 of them — plus the District of Columbia.

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• South Dakota
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin
• Washington, D.C.
• Wyoming

This list has changed in recent years, mostly as more states stopping the taxation of Social Security. Missouri and Nebraska, for example, began exempting Social Security in 2024.

Here are the 12 states that do tax Social Security benefits:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

Keep in mind, though, that even among the states that do tax Social Security, many only tax those at higher income levels, leaving lots of residents with no taxes on Social Security. If you live in one of those states, you might want to take a closer look at its specific rules.

Don’t forget the federal government

Of course, while your state may not tax Social Security or retirement income, there’s always Uncle Sam. The federal government does tax Social Security benefits, in some cases. Specifically, up to 85% of your benefits may be taxed federally. (That doesn’t mean that you’ll hand over 85% of your benefits — just that up to 85% of your benefits may count as taxable income, taxed at your income tax rate.)

The table below shows the taxation thresholds:

Source: Social Security Administration.
*Your “combined income” is your adjusted gross income (AGI) plus non-taxable interest, plus half of your Social Security benefits

The big tax picture

Finally, when thinking about how you’re taxed, never focus solely on the taxation (or non-taxation) of income. Remember that there are many kinds of taxes, and they vary by location.

While your state may not tax any income at all, it still needs to generate revenue, so it might have a higher-than-average sales tax and/or property tax. So you might strategize. If, for example, you rent and pay no property taxes, a state with little or no income tax but high property taxes could be good for you.

As you develop a plan for your retirement, keep taxes in mind. And if you’re not already saving and investing in earnest for retirement, consider starting soon — because Social Security income alone will not be enough.