In 2026, only eight states tax Social Security benefits, nine states have no personal income tax at all, and the remaining states with an income tax generally treat pension and retirement account withdrawals as ordinary taxable income. So the short answer to what states tax Social Security and pensions is: a shrinking minority tax benefits, most tax pension distributions, and where you live can shift your retirement tax bill by thousands of dollars a year.
Nine States With No Income Tax at All
The simplest picture belongs to the states that impose no personal income tax whatsoever. If you live in one of them, your Social Security, pension, 401(k) withdrawals, IRA distributions, and every other form of retirement income are free from state income taxation.
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire joined this group recently. Its interest and dividends tax was repealed effective January 1, 2025, making it a fully no-income-tax state for 2026 and beyond. 1NH Department of Revenue Administration. Interest and Dividends Tax
The tradeoff is that several of these states lean harder on sales and property taxes. Tennessee’s combined state and local sales tax rate averages 9.61%, and Washington’s averages 9.51%, among the highest in the country. Alaska has no state sales tax, though some local governments impose their own. Whether the overall picture is cheaper depends on how much of your budget goes to taxable purchases versus housing, healthcare, and groceries, which are often exempt or taxed at lower rates.
Eight States That Still Tax Social Security in 2026
Only eight states tax Social Security benefits in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. West Virginia dropped off the list this year after completing a full phaseout that exempts 100% of Social Security benefits from state income tax starting with the 2026 tax year. 2West Virginia Legislature. Senate Bill 5
None of the remaining eight tax benefits across the board. Each uses some combination of income limits, age tests, or phaseouts, and the details matter.
Colorado. Residents age 65 and older can subtract the entire amount of their federally taxed Social Security benefits from state taxable income, with no income cap. Filers aged 55 to 64 get the full subtraction only if their adjusted gross income stays below $75,000 (single) or $95,000 (joint). Above those thresholds, the subtraction is capped at $20,000. 3Colorado Department of Revenue. Income Tax Topics – Social Security, Pensions and Annuities
Connecticut. Connecticut provides a deduction for Social Security benefits that phases in based on income. Legislation has been proposed to eliminate the qualifying income thresholds entirely, but the income-tested rules still apply. Confirm your filing year’s specific thresholds with the Connecticut Department of Revenue Services.
Minnesota. The state offers two calculation methods, a simplified subtraction and an alternate subtraction, and you use whichever produces the larger benefit. Under the simplified method for 2026, the maximum subtraction is $5,840 for joint filers and $4,560 for single or head-of-household filers. The phaseout begins at $110,780 for joint filers and $86,410 for single filers. 4Minnesota Department of Revenue. Tax Year 2026 Inflation-Adjusted Amounts
Montana. Social Security is taxed to the extent it is included in your federal taxable income. Residents aged 65 and older receive a separate $5,500 subtraction from federal taxable income, or $11,000 if both spouses qualify, which reduces the overall tax bite. The amount is adjusted annually for inflation. 5Montana Department of Revenue. Montana Tax Simplification Resource Hub
New Mexico. Social Security is fully exempt for single filers with income under $100,000, joint filers under $150,000, and married-filing-separately filers under $75,000. Above those limits, benefits become taxable. 6New Mexico Taxation and Revenue Department. Social Security Income Tax Exemption
Rhode Island. Social Security is exempt if your adjusted gross income falls below an annually inflation-adjusted threshold. Recent thresholds have been approximately $101,000 for single filers and $126,250 for joint filers, though the exact 2026 figure may be slightly higher. 7Rhode Island Division of Taxation. Rhode Island Retirement Income Tax Guide
Utah. The state uses a tax credit that offsets state tax on Social Security income and phases out at higher income levels. Legislative efforts to eliminate Social Security taxation entirely have gained momentum, so check your actual liability with the Utah State Tax Commission for the current tax year.
Vermont. Vermont provides a full exemption for single filers with AGI up to $50,000 and joint filers up to $65,000. The exemption phases out between $50,000 and $60,000 for single filers and between $65,000 and $75,000 for joint filers, disappearing completely above those ceilings. 8Vermont Department of Taxes. Seniors and Retirees
The trend is clearly toward eliminating these taxes. The number of taxing states has fallen from thirteen a decade ago to eight today, with several of the remaining eight actively considering further cuts.
How States Tax Pensions, 401(k)s, and IRAs
Pension and retirement account taxation works differently from Social Security in most states. Distributions from 401(k) plans, traditional IRAs, and private pensions are treated as ordinary income in the majority of the 41 states with an income tax, so they face the same rates as wages. Effective state tax rates on retirement distributions generally fall between roughly 2% and 10%, depending on the state’s brackets and how much you withdraw annually.
Three states stand out as exceptions. Illinois, Mississippi, and Pennsylvania all impose an income tax on wages but do not tax qualified retirement income from 401(k)s, IRAs, or pensions. That combination can be valuable for someone with a large retirement account balance planning heavy withdrawals.
Government pensions often receive better treatment than private-sector plans. Many states partially or fully exempt income from federal, state, or local government retirement systems while taxing distributions from private 401(k) plans and IRAs at full rates. If you worked in the public sector, check whether your state extends its pension exemption to your specific retirement system, because eligibility can depend on the plan type rather than just the employer.
Roth IRAs
Qualified distributions from a Roth IRA are generally tax-free at both the federal and state level. Because you contribute after-tax dollars to a Roth account, withdrawals after age 59½ from an account open at least five years do not show up as taxable income on your federal return, and states that follow federal definitions treat them the same way. Roth conversions earlier in retirement are a common strategy for reducing future state tax exposure, particularly in high-tax states.
Early Withdrawals
Pulling money from a tax-deferred retirement account before age 59½ triggers a 10% federal penalty on top of ordinary income tax. 9Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Some states add their own penalty. California, for example, imposes an additional 2.5% state tax on early distributions. Check your state’s rule before assuming the federal penalty is the only cost.
Senior Exemptions and Deductions
Many states that do tax retirement income soften the impact with breaks targeted at older residents. A deduction reduces your taxable income before the rate is applied, so its value depends on your bracket. A credit reduces your actual tax bill dollar for dollar, making it more valuable at lower income levels. 10Internal Revenue Service. Credits and Deductions for Individuals
Georgia is a strong example. Residents aged 65 and older can exclude up to $65,000 in retirement income, including pensions, interest, dividends, and capital gains. A married couple filing jointly where both spouses qualify can exclude twice that amount. 11Georgia Department of Audits. Tax Incentive Evaluation – Retirement Income Exclusion Exclusions like this can zero out the state tax bill for retirees with moderate incomes, even in states where retirement income is technically taxable. Details vary widely: age thresholds, income ceilings, and which types of income count toward the limit all differ by state.
If you are under the exemption age or above the income ceiling, your pension income is taxed at the same rates as wages. Retirees whose income fluctuates year to year, often because of required minimum distributions or a one-time event like selling a home, can qualify for an exemption one year and lose it the next. Timing withdrawals to stay under the relevant threshold can be worth hundreds or thousands of dollars a year.
Military Retirement Pay
Military retired pay has received increasingly favorable state treatment. Most states with an income tax now fully exempt it, and the holdouts keep expanding their exemptions. Vermont expanded to a full exemption for veterans and survivors with federal AGI under $125,000, with a partial exemption available up to $175,000. 12Soldier for Life. 2026-02 MAB State Tax Breaks Expand California introduced a partial exemption of up to $20,000 in military retired pay, available through 2030 for single filers with AGI under $125,000 or joint filers under $250,000. Delaware offers an exemption of up to $12,500, and Oregon has considered legislation to fully exempt military retirement pay starting in 2026. The nine no-income-tax states, of course, automatically exempt military retirement pay along with everything else.
What Changes if You Move States in Retirement
Moving to a lower-tax state is one of the most effective tools retirees have for cutting their overall tax bill. Federal law gives you a meaningful backstop, but state residency rules impose real conditions.
Your Former State Can’t Follow Your Pension
A federal statute prohibits any state from taxing the retirement income of someone who is not a resident or domiciliary of that state. The protection covers income from 401(k) plans, IRAs, 403(b) plans, government pension plans, deferred compensation plans, and military retirement pay. 13Office of the Law Revision Counsel. 4 US Code 114 – Limitation on State Income Taxation of Certain Pension Income If you retire from a job in New York and move to Florida, New York cannot tax your pension distributions. The protection applies to substantially equal periodic payments made over your lifetime or a period of at least 10 years.
You Have to Actually Change Domicile
That federal protection only works if you become a resident of the new state in fact, not just on paper. States distinguish between domicile (your permanent home, the place you intend to return to) and statutory residency (where you spend enough days to be treated as a resident). You can have only one domicile at a time, but a state can still claim you as a statutory resident if you maintain a home there and spend roughly half the year within its borders. Many states use a 183- or 184-day threshold.
If your old state challenges the move, the burden is on you to show that you genuinely left. Filing a change-of-address form is a start. Auditors look at the full picture:
- Obtain a driver’s license and vehicle registration in your destination state, and surrender the old ones.
- Register to vote in the new state and cancel your registration in the old one.
- If you own homes in both states, claim the homestead exemption in the new state and relinquish it in the old one.
- Move your primary bank accounts, update estate planning documents, establish doctors and dentists in the new location, and change your address with the Social Security Administration and Medicare.
- Track your days carefully, especially in the first few years, and make sure you spend more time in the new state than the old one.
No single item on the list wins the case. States look at the totality of your circumstances, and people who keep most of their life anchored in the old state while claiming a new domicile invite scrutiny. The strongest position is one where your daily life, social ties, and financial records all point to the same place.