State Taxes on Retirement Income 2026: Complete State-by-State Guide

Where you retire can make a difference of thousands of dollars per year in taxes. State tax rules on retirement income vary dramatically — from states like Florida and Texas that charge nothing, to states like Minnesota that tax Social Security, pensions, and 401(k)/IRA withdrawals as ordinary income.

This isn’t just about income taxes. Property taxes, sales taxes, and estate taxes also affect your retirement budget. A state with no income tax but sky-high property taxes (looking at you, Texas) may not save you as much as you think. The tables below cover every angle so you can make an informed decision about where to retire.

States with No Income Tax

These states don’t tax any income, including retirement income:

These nine states (plus New Hampshire’s partial exemption) are the simplest option for retirees who want to avoid state income taxes entirely. Florida alone accounts for the largest share of retirement migration in the U.S. — and tax-friendliness is a major reason. However, some of these states compensate with higher property or sales taxes, so look at the full picture before relocating.

States That Fully Exempt All Retirement Income

These states have a state income tax but exempt Social Security, pensions, and retirement account withdrawals:

These three states offer the best of both worlds for retirees: a functioning income tax system that funds public services, but zero tax on retirement income. Pennsylvania is particularly popular with retirees from neighboring high-tax states like New York and New Jersey.

Social Security Tax Treatment by State

At the federal level, up to 85% of your Social Security benefits may be taxable depending on your combined income. On top of that, a shrinking number of states add their own layer of taxation.

Social Security taxation at the state level has changed rapidly in recent years. Kansas eliminated its tax starting with the 2024 tax year, and Missouri, Nebraska, and West Virginia have also fully eliminated theirs — all four are now confirmed “no SS tax” states, independently corroborated across two separate fact-checking passes on this site (September 2026). As of this review, only eight states still tax Social Security to any degree: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.

States That May Still Tax Social Security (eight states, as of 2026)

Most of these states exempt lower-income retirees entirely. If your total income is modest, you may owe nothing even in a state that technically “taxes” Social Security. But for retirees with substantial pension income, 401(k) withdrawals, or investment income, these states can take a meaningful bite.

The trend is toward exemption: Kansas, Nebraska, West Virginia, and Missouri have all confirmed eliminated or phased out their Social Security taxes in recent years. This list of eight remaining states may continue to shrink — check for legislative changes if you live in one of them.

States That Fully Exempt Social Security

Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, 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, West Virginia, Wisconsin, Wyoming

This means 42 states don’t tax Social Security benefits at all. The maximum Social Security benefit can exceed $58,000/year — keeping that entirely exempt from state taxes is significant.

Pension Tax Treatment by State

Pension taxation varies more than any other retirement income category. Some states exempt government pensions but tax private ones; others use flat dollar exemptions. If you’re receiving a federal, state, or military pension, this section is critical.

States with Full or Significant Pension Exemptions

Federal civilian and military retirees should pay special attention here. States that exempt “government pensions” typically include federal pensions (FERS/CSRS) and military retirement pay. This exemption can save thousands annually — a federal retiree with a $40,000 pension in Massachusetts pays $0 state tax on it.

States That Fully Tax Pensions (Like Regular Income)

California, Connecticut, Indiana, Minnesota, Nebraska, North Dakota, Oregon, Rhode Island, Vermont, Wisconsin

If you’re comparing a pension vs. 401(k) payout, state tax treatment may tip the balance. A lump-sum 401(k) rollover into an IRA in a tax-friendly state could save significantly over annual pension payments in a high-tax state.

401(k) and IRA Tax Treatment

Most states treat 401(k) and IRA distributions as ordinary income, but some offer meaningful exemptions:

States with Retirement Income Deductions/Credits

Exemption amounts below are approximate and several are inflation-indexed annually — confirm the current-year figure at your state’s department of revenue.

Georgia’s $65,000 exemption is particularly generous — a retiree couple over 65 can exempt $130,000 of retirement income, making Georgia functionally tax-free for most retirees.

These exemptions matter when planning required minimum distributions (RMDs). If your state exempts the first $20,000+ of retirement income, smaller RMDs may be entirely tax-free at the state level even though they’re taxed federally. This is another factor in the Roth vs. traditional decision — Roth withdrawals aren’t counted as income in any state.

Tax-Friendliness Comparison

Most Tax-Friendly States for Retirees

Least Tax-Friendly States for Retirees

The best states for retirees depends on more than just tax rates — cost of living, healthcare quality, climate, and proximity to family all matter. But taxes can easily represent a $5,000-$10,000+ annual difference, which compounds significantly over a 20-30 year retirement.

Tax Impact Examples

$50,000 Retirement Income Comparison

Assumes single filer, age 65+, standard deduction. Illustrative estimates only — actual tax depends on your specific deductions and income composition.

$100,000 Retirement Income Comparison

At $100,000 in retirement income, the spread between the most and least tax-friendly states can be several thousand dollars a year — a meaningful sum over a 20-year retirement. Even modest relocations can help: moving from a state that taxes retirement income to a neighboring no-tax state can meaningfully reduce your annual tax bill. Use our retirement income calculator to model your specific situation.

Other Tax Considerations for Retirees

Property Taxes

Many states offer property tax exemptions or freezes for seniors. Don’t overlook this — property taxes often exceed state income taxes for retirees who own their home:

Sales Tax

States with no sales tax can save retirees hundreds to thousands per year on everyday spending:

Estate/Inheritance Tax

If you’re concerned about passing wealth to heirs, estate tax matters. Most states have no estate or inheritance tax, but those that do can significantly reduce what your beneficiaries receive:

Pennsylvania’s inheritance tax is worth noting: despite exempting all retirement income from income tax, it imposes a 4.5-15% inheritance tax depending on the relationship of the beneficiary. This is a trade-off to consider as part of your broader estate planning.

Planning Strategies

1. Establish residency before retiring. Most states require 183+ days of physical presence plus intent to remain. Don’t assume snowbirding counts — maintain a permanent home, driver’s license, and voter registration in your preferred state.

2. Coordinate with Social Security claiming. If you plan to relocate to a no-tax state, delaying Social Security until after the move ensures you never pay state tax on those benefits.

3. Use Roth conversions strategically. Converting traditional IRA/401(k) funds to Roth while in a low-tax or no-tax state means the converted amount is taxed at your (low) state rate — and future Roth withdrawals are tax-free everywhere.

4. Model the full picture. A state with moderate income tax but low property tax and no sales tax may cost less overall than a no-income-tax state with high property taxes. Use our retirement income calculator for comprehensive analysis.

Key Takeaways

1. No income tax states offer the simplest tax situation for retirees (FL, TX, NV, WY, TN, SD, AK, WA)

2. Only eight states tax Social Security — even then, many exempt lower-income retirees

3. Several states with income tax still exempt retirement income (PA, MS, IL, AL)

4. Consider the full tax picture — income, property, sales, and estate taxes all matter

5. State residency matters — you’re taxed by where you live, not where you earned the pension

6. The trend favors retirees — more states are eliminating retirement income and Social Security taxes each year

For state-by-state retirement rankings, see best states to retire for taxes and best states for retirees. Return to the Best Places to Retire hub.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.