Thirteen states don’t tax Roth conversions in 2026. Nine collect no personal income tax at all, and four more — Illinois, Iowa, Mississippi, and Pennsylvania — tax wages but exempt retirement income, including a conversion from a traditional IRA to a Roth. A handful of additional states offer age-based exclusions that can shelter part or all of a conversion depending on how much you move and how old you are.
The Nine States With No Income Tax
If you live in one of these states, a Roth conversion has no state tax consequence at all:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire is the newest member of the group. It historically taxed interest and dividends at 5%, but that tax was fully repealed effective January 1, 2025, so no New Hampshire residents owe state tax on any form of income for 2026 and beyond.1New Hampshire Department of Revenue Administration. Technical Information Release TIR 2025-001 Interest and Dividends Tax Repealed
Washington deserves a quick note. The state does impose a tax on long-term capital gains above a certain threshold, but retirement account distributions, including Roth conversions, are explicitly excluded from that tax.
In all nine, only the federal bill applies. You still need to report the conversion on your federal return and may need to make estimated payments to the IRS, but the state side is a non-issue.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
Four Income Tax States That Exempt Retirement Income
These states collect tax on wages but carve out retirement rollovers. Each has its own reasoning, and each has a catch worth knowing before you convert.
Pennsylvania
Pennsylvania taxes eight classes of income at a flat 3.07% rate but generally does not count retirement account rollovers as taxable. Because Pennsylvania does not allow a deduction for traditional IRA contributions the way the federal system does, money going into a traditional IRA has already been taxed at the state level. Converting it to a Roth therefore creates no new state liability. The Pennsylvania Department of Revenue has confirmed that amounts transferred from a traditional IRA to a Roth IRA via conversion are generally not subject to the state’s personal income tax.3Pennsylvania Department of Revenue. Can I Exclude Rollover Income From Line 6 on My Property Tax/Rent Rebate Claim
Illinois
Illinois uses a flat 4.95% rate and starts its calculation from federal adjusted gross income, so a conversion looks taxable at first glance. But Illinois allows taxpayers to subtract Roth conversion amounts that were included in federal AGI on their state return. The practical result is zero Illinois tax on the conversion, a benefit many residents miss because they assume the flat tax hits everything.
Iowa
Iowa moved to a flat 3.9% income tax rate beginning in 2026 and excludes retirement income from state taxation for residents who are 55 or older or who are disabled.4Iowa Department of Revenue. Individual Income Tax Provisions The same exclusion extends to a surviving spouse receiving retirement income from a qualifying individual. If you’re under 55 and not disabled, the exclusion doesn’t reach you and your conversion is taxable at 3.9%.
Mississippi
Mississippi does not tax retirement income, pensions, or annuities for taxpayers who have met the retirement plan requirements.5Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions The caveat: early distributions — money taken out before you meet normal retirement criteria — may be subject to Mississippi income tax. If you’re converting before reaching retirement age under your plan’s rules, confirm with the Department of Revenue that your conversion qualifies for the exclusion.
States With Age-Based Partial Exclusions
Some states tax income broadly but let older residents exclude a fixed dollar amount of retirement income. Whether your conversion escapes tax depends on the conversion amount, your age, and how much other retirement income you’ve already received that year.
Georgia
Georgia offers one of the more generous exclusions in the country. Residents 65 and older can exclude up to $65,000 per person from state income tax, and those between 62 and 64 can exclude up to $35,000.6Georgia Department of Audits and Accounts. Tax Incentive Evaluation – Retirement Income Exclusion Summary For married couples filing jointly where both spouses qualify, the exclusion can double. A $50,000 conversion for a 66-year-old with no other retirement income falls entirely within the exclusion, meaning zero Georgia tax. Convert $80,000 and $15,000 is taxable at Georgia’s graduated rates.
The exclusion covers retirement income broadly: pensions, capital gains, interest, dividends, and up to $5,000 of earned income.7Georgia Department of Revenue. Retirement Income Exclusion Your conversion shares that cap with all other qualifying income. If you already receive a $40,000 pension and you’re 65, only $25,000 of the conversion fits under the limit.
South Carolina
South Carolina’s deduction is smaller. Residents under 65 can deduct up to $3,000 of retirement income, and those 65 and older can deduct up to $10,000.8South Carolina Legislature. South Carolina Code 12-6-1170 – Retirement Income Deduction From Taxable Income for Individual Anything above those limits is taxed at South Carolina’s graduated rates, which top out at 6.5%. A $50,000 conversion for a 67-year-old leaves $40,000 exposed. Legislation has been proposed to increase the deduction for those 65 and older, so check the current thresholds before planning a large conversion.
What the Other States Do
The roughly 30 remaining states treat a Roth conversion the same way the federal government does: as ordinary taxable income in the year you convert. They start their income tax calculation from your federal adjusted gross income and offer no special deduction or exclusion for retirement rollovers.
The mechanics are straightforward. Convert $60,000 from a traditional IRA to a Roth and that $60,000 appears on your federal return as income. Your state return picks up the same number as its starting point and applies its own rates, which range from roughly 2% in the lowest flat-rate states to over 13% in California’s top bracket. A conversion that bumps your income from $80,000 to $140,000 can push you into a higher state bracket, raising the effective rate on the entire conversion.
If You’re Moving Around the Conversion
Timing matters when you cross state lines the same year you convert. Most states tax you as a part-year resident, claiming the portion of income you received while you lived there.
A conversion done after you’ve established residency in your new state is generally taxed by that state, not the one you left. Move from California to Nevada in March and convert in October, and Nevada has no income tax to charge while California typically won’t tax income received after you were no longer a resident. But states define residency differently, and some are aggressive about keeping former residents on the tax rolls. New York, for example, requires “clear and convincing evidence” that you’ve abandoned your domicile before it stops treating you as a resident.9New York State Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting If you keep a home there and spend real time in the state, New York can still claim tax on the conversion.
The safer approach: complete the conversion well after you’ve settled in the new state, changed your driver’s license, registered to vote, and shifted the center of your daily life. Converting while you’re straddling two states creates audit exposure on both sides.
Estimated Payments in Taxing States
A large conversion can trigger state underpayment penalties if you don’t make estimated payments during the year. Most income tax states require quarterly estimates when your withholding won’t cover at least 90% of your current-year liability, or 100% of last year’s (110% if your income exceeds $150,000). These thresholds mirror the federal safe harbor rules, though exact percentages and dollar minimums vary.
Convert $100,000 in a state with a 5% rate and you could owe $5,000 on top of the federal bill. Missing the quarterly deadlines, typically April 15, June 15, September 15, and January 15, means interest and penalties. Some states charge underpayment interest from the date each installment was due, not just from the filing deadline.
The fix is simple. Either have your IRA custodian withhold state tax at conversion, or send a quarterly estimate to your state’s revenue department in the same quarter. If you convert late in the year, a single estimated payment by January 15 of the following year usually avoids the penalty.
The Hidden Cost Even in No-Tax States
Living somewhere that doesn’t tax the conversion doesn’t mean the conversion is free of state-level consequences. Many state tax credits and property tax relief programs use your adjusted gross income or household income as the eligibility line. A conversion inflates both numbers, and it can disqualify you from benefits you’ve been receiving for years.
Property tax credits aimed at seniors and low-to-moderate-income homeowners are the most common casualty. These programs often use income caps below $25,000 or $30,000, thresholds easily blown by even a modest conversion. A $40,000 conversion that saves you a few hundred dollars in future tax can cost you a property tax credit worth about the same in the current year. State earned income credits, dependent care credits, and means-tested prescription drug assistance work the same way.
Before converting, add the conversion amount to your current income and check whether the total crosses any benefit thresholds you rely on. If it does, splitting the conversion across multiple tax years can keep each year’s income under the limit while still moving the money into the Roth over time.