If you want to know what states don’t tax retirement income, the short answer is that nine states impose no personal income tax at all, and a handful of others do collect income tax but fully exempt Social Security, pensions, 401(k) withdrawals, and IRA distributions. Together, that gives retirees more than a dozen states where their retirement money passes through untouched at the state level. The rest of the country falls on a spectrum: most states exempt Social Security but tax other retirement income, some offer generous age-based deductions, and eight still tax at least a portion of Social Security benefits.
The Nine States With No Income Tax
These states cannot tax retirement income because they don’t tax income at all:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
You file no state income tax return in any of them.1The White House. The Economic Impact of State Income Tax Elimination Social Security, pensions, 401(k) distributions, IRA withdrawals, and any other retirement income arrive without state withholding.
Two of these deserve a note. New Hampshire finished repealing its old tax on interest and dividends as of January 1, 2025, so it now qualifies as a full no-income-tax state for anyone retiring there today.2NH Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect Washington does levy a capital gains tax on high earners who sell stocks or bonds, but that tax explicitly excludes all retirement account transactions. Your 401(k), IRA, Roth IRA, and pension are not affected.
States That Tax Wages But Fully Exempt Retirement Income
A smaller group of states collect income tax on working-age residents but carve out retirement income entirely. If your income in retirement comes from Social Security, a pension, and withdrawals from tax-deferred accounts, you effectively pay no state income tax in these states.
Illinois exempts Social Security, pensions, 401(k) plans, traditional and Roth IRA distributions, government retirement plans, and railroad retirement income. The state’s flat 4.95 percent rate applies to wages and other income, but retirement money is carved out.
Iowa excludes all qualified retirement income for taxpayers who are 55 or older, disabled, or a surviving spouse of someone who qualified. That covers pensions, 401(k)s, traditional and Roth IRAs, deferred compensation plans, and SEP and SIMPLE plans. The exclusion does not apply if you are under 55 and not disabled.
Mississippi exempts all qualified retirement income, including pensions, annuities, IRA distributions, and Social Security. Early withdrawals taken before meeting plan requirements remain taxable. The state’s income tax rate drops to 4 percent for 2026 and is scheduled to continue falling.
Pennsylvania does not tax Social Security, pensions, 401(k) distributions, or IRA withdrawals, provided the distribution qualifies as retirement income under the plan’s terms. Money pulled out before the plan’s normal retirement age can be treated as taxable compensation.
Michigan has been phasing out its tax on retirement income and reaches full exemption for most pension and retirement plan distributions by the 2026 tax year. Social Security was already exempt.
Most States Exempt Only Social Security
The vast majority of states with an income tax exempt Social Security benefits but still tax pensions, 401(k) withdrawals, and IRA distributions at their standard rates. That group includes Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Virginia, West Virginia, and Wisconsin. Many of these offer partial exclusions on other retirement income once you reach a certain age.
The practical effect: if Social Security is your primary income source, these states are functionally tax-free for you. If you draw significant income from an employer plan or a large IRA, you’ll owe state tax on those distributions.
States That Still Tax Social Security
Eight states tax at least a portion of Social Security benefits in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. Each sets its own income thresholds and exemptions, so whether you actually owe depends on your total income.
Colorado allows retirees 65 and older to deduct all federally taxed Social Security from state income. Connecticut fully exempts benefits below $75,000 (single) or $100,000 (joint) in AGI, and even above those thresholds no more than 25 percent of benefits are taxed. Minnesota, New Mexico, Rhode Island, and Vermont all use similar income-based phase-outs, meaning lower- and middle-income retirees in these states often escape state tax on their benefits even though the tax technically exists. Montana taxes benefits with only a small $5,500 subtraction for those 65 and older. Utah taxes benefits but offers a credit that can offset some or all of the tax for lower-income retirees.
West Virginia is worth watching. It is phasing out its Social Security tax and will fully exempt benefits starting with the 2026 tax year, moving it off this list.
Age-Based Deductions That Can Zero Out the Tax
Some states don’t exempt retirement income outright but offer dollar-amount deductions large enough to eliminate state tax for many retirees.
Georgia lets residents aged 62 to 64 exclude up to $35,000 of retirement income per person, and the exclusion jumps to $65,000 at age 65. The definition of retirement income is broad: pensions, annuities, interest, dividends, capital gains, rental income, royalties, and up to $5,000 of earned income from part-time work. A married couple filing jointly where both spouses are 65 or older can exclude up to $130,000 combined. Social Security is already exempt on top of that.
South Carolina provides a retirement income deduction of up to $3,000 for taxpayers under 65 and up to $10,000 for those 65 and older, per taxpayer.3South Carolina Legislature. South Carolina Code 12-6-1170 – Retirement Income Deduction From Taxable Income for Individual A married couple with both spouses qualifying can claim double. Combined with the state’s Social Security exemption, this provides meaningful relief for retirees with moderate pension or IRA income.
Other states offer smaller versions of the same idea. The amounts, age triggers, and definitions of qualifying income vary, so check the specific rules for any state you’re considering.
Military Retirement Pay
Military retirees have seen a wave of state tax relief. As of 2026, the vast majority of states fully exempt military retired pay from state income tax. This includes every no-income-tax state plus Alabama, Arizona, Arkansas, Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, West Virginia, and Wisconsin, among others.
A few states still tax military retirement partially. Delaware exempts up to $12,500 for those 60 and under, with a broader pension exemption after 60. California introduced a partial exemption beginning in 2025 that subtracts up to $20,000 for retirees with federal AGI below $125,000 (single) or $250,000 (joint). Vermont fully exempts military retirement for AGI below $125,000 and offers a proportional exemption between $125,000 and $175,000.
Early Withdrawals Lose the Exemption
Every state exemption described above applies to qualified retirement distributions, meaning money taken after you’ve met the plan’s age or service requirements. Pull money out early and the protections disappear. At the federal level, withdrawals before age 59½ trigger a 10 percent additional tax on top of regular income tax, with limited exceptions for disability, certain medical expenses, and a few other situations.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions SIMPLE IRA distributions in the first two years of participation carry a steeper 25 percent penalty.
At the state level, early distributions lose their exempt status in states like Pennsylvania and Mississippi that otherwise shield retirement income. The money becomes ordinary taxable income at the state’s normal rate. A few states also add their own early withdrawal penalty. California charges 2.5 percent (6 percent for early SIMPLE IRA distributions). Most states do not stack a separate penalty but simply tax the distribution as regular income.
Roth Accounts in States That Tax Retirement Income
Qualified Roth IRA and Roth 401(k) distributions are already tax-free at the federal level, so in no-income-tax states and full-exemption states the state question is academic. It matters in states that tax some retirement income but exempt other types. Because Roth withdrawals don’t appear as taxable income on your federal return, most states that tie their tax calculations to federal AGI automatically exclude Roth distributions as well. Iowa’s retirement income exclusion explicitly covers Roth IRAs and Roth conversions.
The practical takeaway: if you’ve built up Roth savings, you get no state tax on qualified withdrawals in most places. In the eight states that tax Social Security, holding a larger share of your savings in Roth accounts can keep your reported income below the thresholds that trigger taxation of your benefits.
Total Tax Burden Matters More Than the Income Tax Alone
Choosing a retirement state on income tax alone is a common mistake. States without an income tax fund their governments through sales and property taxes instead, and for retirees on fixed incomes those bills can add up fast.
Tennessee’s average combined sales tax rate tops 9.6 percent, and Washington’s averages about 9.5 percent. Texas and Nevada both hover around 8.2 percent. On the property tax side, Texas stands out with effective rates near 1.36 percent of home value, and New Hampshire runs about 1.41 percent, roughly triple what you’d pay in Nevada or Tennessee. Alaska has no statewide sales tax, though municipalities charge their own. Wyoming and South Dakota keep both sales and property taxes relatively low on top of having no income tax.
Run the numbers on your actual retirement spending: housing, healthcare, groceries, discretionary purchases. A state that exempts a $40,000 pension saves you less than $2,000 in most tax brackets. A state with property taxes that run $3,000 higher per year on a comparable home wipes out that advantage. Renters who spend heavily on taxable goods should weight sales tax more heavily; homeowners should weight property tax. The state that keeps the most money in your pocket depends on the shape of your budget, not just the income tax line.