Fourteen states will not tax your traditional IRA distributions in 2026. Nine of them have no personal income tax at all, and five more keep an income tax but fully exempt retirement withdrawals from it. Several other states shield part of your IRA income through age-based or income-based exemptions, so even outside the fourteen you may owe less than the standard rate suggests.
The Nine States With No Income Tax
The cleanest way to avoid state tax on an IRA withdrawal is to live somewhere that taxes no personal income at all. Wages, investment gains, and every dollar of your IRA distribution stay outside the state tax base. For 2026, the nine states are:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire is the newest addition. The state used to tax interest and dividend income, but that tax was fully repealed for tax periods beginning after December 31, 2024, so residents owe no state income tax of any kind starting in 2025.1New Hampshire Department of Revenue Administration. Interest and Dividends Tax Frequently Asked Questions IRA distributions were never covered by that old tax anyway, since it applied only to interest and dividends.
Washington deserves a small footnote. It has no personal income tax, but it does impose a separate capital gains tax on the sale of certain long-term assets like stocks and bonds. That tax does not reach IRA distributions, so retirement withdrawals stay untaxed at the state level.
Living in any of these nine states means no state return calculation for your IRA money. Federal income tax on your traditional IRA distribution still applies.
The Five States That Fully Exempt IRA Distributions
Five states charge state income tax but carve out a full exemption for retirement plan distributions, including traditional IRA withdrawals. You will still pay state tax on wages or business income, but your IRA money is protected.
- Illinois: State law provides a full subtraction for federally taxed retirement income, so traditional IRA distributions come out of your taxable income entirely.2Illinois General Assembly. 35 ILCS 5/203
- Iowa: Following recent tax reforms, Iowa fully exempts IRA and 401(k) distributions from state income tax.
- Michigan: Beginning in January 2026, qualifying pension and retirement income, including IRA and 401(k) distributions, is fully exempt from Michigan income tax.
- Mississippi: The state’s definition of gross income excludes distributions from retirement plans, keeping IRA withdrawals out of the state tax base.3Justia Law. Mississippi Code 27-7-15 – Gross Income Defined
- Pennsylvania: The state excludes payments recognized as retirement benefits from taxable compensation, provided you have separated from service and reached the plan’s retirement age.4Pennsylvania General Assembly. Pennsylvania Statutes Title 72 PS Taxation and Fiscal Affairs 7301
Pennsylvania carries an important caveat. If you take distributions before reaching the retirement age specified in your plan, those early withdrawals may be treated as taxable compensation. The other four states exempt distributions regardless of when you take them.
None of these exemptions applies automatically. You typically have to claim the correct subtraction or exclusion on your state return, and missing that line means overpaying.
States That Exempt Part of Your IRA Income
A larger group of states falls between full taxation and full exemption. They allow you to subtract a portion of your retirement income based on your age, and sometimes on your total income, so part of your IRA distribution escapes state tax while the rest is taxed at normal rates.
Two states show how these partial exemptions typically work:
- Georgia: Taxpayers aged 62 through 64 can exclude up to $35,000 of retirement income per person. At age 65 and older, the exclusion rises to $65,000 per person, so a married couple both 65 or older could exclude as much as $130,000 in combined retirement income.5Justia Law. Georgia Code 48-7-27 – Computation of Taxable Net Income
- Colorado: Taxpayers aged 55 through 64 can subtract up to $20,000 of pension and annuity income, including qualifying IRA distributions. At 65 and older, the limit rises to $24,000.6Department of Revenue – Taxation. Income Tax Topics: Social Security, Pensions and Annuities
Other states use their own formulas. Some phase the exemption out above certain income thresholds; some limit it to specific plan types. Legislatures adjust these figures, so verify the current amount in your state before you file. Even a partial exemption can meaningfully cut the state tax on an IRA distribution.
Roth Accounts Are Treated Differently
The list above addresses traditional IRA distributions, which are taxed as ordinary income at the federal level because contributions went in pre-tax.7Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) Most states that tax income follow the federal treatment.
Roth distributions work differently. You funded the account with money you had already paid income tax on, and qualified Roth distributions (generally those taken after age 59½ from an account open at least five years) are tax-free federally. States with income taxes almost universally respect that treatment, so qualified Roth withdrawals are not taxed at the state level either, even in states that fully tax traditional IRA distributions.
In the fourteen states listed above, the difference between Roth and traditional doesn’t matter for state purposes. Both are untaxed. The distinction only starts to matter in the states that do tax traditional IRA money.
What Happens If You Move
Federal law protects retirees who relocate. Under 4 U.S.C. § 114, no state may impose an income tax on the retirement income of someone who is not a resident of that state.8Office of the Law Revision Counsel. 4 USC 114 – Limitation on State Income Taxation of Certain Pension Income The protection covers distributions from traditional and Roth IRAs, 401(k) plans, 403(b) plans, pensions, deferred compensation, and similar accounts.9Office of the Law Revision Counsel. 4 US Code 114 – Limitation on State Income Taxation of Certain Pension Income Before this law took effect in 1996, some states tried to tax pension income earned within their borders even after the recipient moved away. That’s now prohibited.
The protection only works if you’re genuinely a nonresident of the state you left. States determine that through domicile, meaning your permanent home and the place you intend to remain, and many also apply a physical-presence test, often 183 days, that can independently make you a resident. If you move from a high-tax state, expect it to look closely at whether the move is real. A driver’s license, voter registration, vehicle titles, bank accounts, and a mailing address in the new state all help. So does a day log showing you spent fewer than 183 days in the state you left. States with top rates above 10% are known for aggressive residency audits, and keeping a second home, business, or close family in the old state invites scrutiny.
Once your residency in a tax-friendly state is solid, the state you left loses the right to tax your IRA distributions, whether you’re taking voluntary withdrawals or required minimum distributions.