Written by 
Edited by 
Edited by 
Reviewed by 
States differ in how they tax retirement income, so your location can affect your finances. Some don’t tax retirement income at all, while others tax 401(k)s, IRAs, pensions, or Social Security. Even states with no income tax may have higher property or sales taxes.
You may also want to consider working with a financial advisor when you’re planning for retirement.
Retirement Income Tax Basics
Most retirement income can be subject to federal income taxes. That includes Social Security benefits, pension payments and distributions from IRA and 401(k) plans. Exceptions include qualified withdrawals from Roth IRA and Roth 401(k) plans. Federal income taxes on Roth contributions are paid before the contributions are made. These contributions, as well as any investment gains, can be withdrawn free of federal income taxes after five years if you have reached age 59 ½.
The situation is more complex when it comes to how states will tax your retirement income. Some states have no income tax at all, so all retirement income is tax-free at the state level. Most states specifically exclude Social Security benefits from taxation. Some others also exempt retirement account distributions and pensions, but most have a mix of approaches to taxing retirement income.
Only eight states tax Social Security in some capacity: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. Every other state exempts Social Security, but may tax sources such as pensions, 401(k)s, IRAs and other forms of retirement income if retirees’ income exceeds a certain limit.
9 States That Don’t Tax Any Income at All
Nine states have no state income tax on individual income at all. Eight of them – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – don’t tax wages, salaries, dividends, interest or any sort of income.
It’s important to note that New Hampshire, the ninth state, has no state income tax on wages, salaries, retirement account withdrawals or pension payments. While the Granite State historically has taxed dividends and interest, it stopped taxing these sources in 2025.
No state income tax means these states also don’t tax Social Security retirement benefits, pension payments and distributions from retirement accounts. That means retired residents in these states have no worries about paying state income taxes on their income from any source.
The rest of the states across the country take a variety of approaches to taxing retirement income. Some tax all retirement income, including Social Security, while others tax all or parts of retirement income.
Retirement income taxes vary widely depending on where you live and which income sources you rely on. Use the calculator below to project future income and explore different retirement scenarios.
Retirement Calculator
Calculate whether or not you’re on track to meet your retirement savings goals.
About This Calculator
To estimate how much you may need to save for retirement, we begin by calculating how much you're expected to spend over the course of your retirement. This includes estimating the income you'll need based on your lifestyle preferences, then factoring in how many years you may spend in retirement. We assume a lifespan of 95 by default, though you can adjust it after your calculation is complete.
Once we have a clearer view of your total retirement needs, we use our models to evaluate your existing and future resources. This includes estimating retirement income from Social Security and the impact of current retirement plans, pensions and other accounts. For additional inputs and a comprehensive retirement plan, please see our full Retirement Calculator.
Assumptions
Lifespan: We assume you will live to 95. We stop the analysis there, regardless of your spouse's age.
Retirement accounts: We automatically distribute your future savings optimally among different retirement accounts. We assume that the IRS contribution limits for your retirement accounts increase with inflation.
Social Security: We estimate your Social Security income using your stated annual income and assuming you have worked and paid Social Security taxes for 35 years prior to retirement. Our estimate is sensitive to penalties for early retirement and credits for delaying claiming Social Security benefits.
Return on savings: We assume the percentage return on your savings differs by whether you're pre- or post-retirement and by account type, with a distinction between investment accounts and savings accounts. This assumption does not account for market volatility or investment losses and assumes positive growth over time. All investing involves risk, including the possible loss of principal.
SmartAsset.com is not intended to provide legal advice, tax advice, accounting advice or financial advice (Other than referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions, and tools are for general information only and are not intended to provide specific advice or recommendations for any individual. The retirement calculator is meant to demonstrate different potential scenarios to consider, and is not intended to provide definitive answers to anyone's financial situation. We always suggest that you consult your accountant, tax, legal or financial advisor concerning your individual situation.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). Past performance is not a guarantee of future results. There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
Which States Don’t Tax Some or All Retirement Income?
The following 32 states exempt certain income from retirement accounts and pensions or only tax a portion of it:
| State | Nontaxable Retirement Income | Partially Taxable Retirement Income |
|---|---|---|
| Alabama | Pension income (if contributions were made entirely by employer) | 401(k) and IRA income |
| Arizona | None | Pension income (exemptions for certain pension types)/401(k) and IRA |
| Arkansas | None | Pension income (exemption for military pensions) |
| Colorado | None | Pension income |
| Connecticut | None | Pension income / 401(k) and IRA income |
| Delaware | None | Pension income / 401(k) and IRA income |
| Georgia | None | Pension income / 401(k) and IRA income |
| Hawaii | Pension income | None |
| Idaho | None | Pension income (exemptions for certain military and public pensions) |
| Illinois | Pension income / 401(k) and IRA income | None |
| Iowa | Pension income / 401(k) and IRA income | None |
| Kansas | None | Public pension income |
| Kentucky | None | Pension income (deductions for state, military and private pensions) / 401(k) and IRA income |
| Louisiana | None | Pension income (exemptions for certain pension types) |
| Maine | None | Pension income (exemptions for military pensions and exclusions for MainePERS benefits) |
| Maryland | None | Pension income (exclusions for certain pension types) |
| Massachusetts | None | Public pension income |
| Michigan | None | Pension income (exemptions for military pensions) / 401(k) and IRA income |
| Minnesota | None | Pension income (deductions for military pensions) |
| Mississippi | Pension income / 401(k) and IRA income | None |
| Missouri | None | Pension income (exemptions for military and public pensions) |
| Nebraska | None | Pension income (exemptions for military pensions) |
| New Jersey | None | Pension income (exemptions for military pensions) / 401(k) and IRA income |
| New Mexico | None | Senior deductions |
| New York | None | Pension income (exemptions for public and military pensions) / 401(k) and IRA income |
| North Dakota | None | Pension income (exemptions for military pensions) |
| Oklahoma | None | All retirement income |
| Pennsylvania | Pension income / 401(k) and IRA income | None |
| Rhode Island | None | Pension income (exemptions for military pensions) / 401(k) income |
| South Carolina | None | Pension income (exemptions for military pensions) / 401(k) and IRA income |
| Vermont | None | Pension income (deductions for military pensions) |
| West Virginia | None | Modest exemption for all kinds of retirement income; amount over threshold is taxable |
States With Small Retirement Tax Requirements
Some states that don’t appear on this list of those that don’t tax retirement income at all are still relatively generous when it comes to letting retirees off the tax hook. For instance, Georgia does not tax Social Security retirement benefits and also provides a deduction of anywhere from $35,000 to $65,000 per person (depending on your age) on all other types of retirement income.
Also, in Pennsylvania, all Social Security benefits and IRA/401(k) income are exempt, and the state does not levy income tax on pension payments for those over 60. Clearly, state taxation of retirement income is somewhat complicated. One of the biggest differences between states is the variety of income caps to qualify for exemptions.
In addition, state taxation of retirement benefits is a moving target. State tax laws change over time. For instance, New Hampshire’s tax on dividends and interest phased out in 2025.
Other Factors to Consider When Choosing a Retirement State
State income taxes are only one piece of the retirement planning equation. Some states that don’t tax retirement income may have higher property taxes, sales taxes, or local taxes that increase the overall cost of living. Housing prices, utility costs, healthcare access, and insurance premiums can also differ significantly from one state to another and may offset any potential savings from lower income taxes.
Healthcare is often a major expense in retirement, so consider the availability and quality of hospitals, clinics, and long-term care facilities in the area where you plan to live. The cost of health insurance premiums, including supplemental Medicare coverage, can also vary by state.
Lifestyle factors matter as well. Climate, transportation, and proximity to family or support networks can influence both your financial situation and your quality of life. For some retirees, estate and inheritance taxes are another consideration, as these can affect how much of their wealth is passed to beneficiaries.
Before deciding to move, review each state’s full tax structure and general living costs instead of focusing solely on income tax rates. A financial advisor or tax professional can help you evaluate how all these factors fit into your broader retirement plan.
Bottom Line
Nine states don’t tax retirement income.Other states offer partial or full exemptions on Social Security, pensions, and retirement account withdrawals. Rules vary, so check with the state tax office before moving to lower your tax bill.
Tips for Retirement
- A financial advisor can help you balance the tax considerations and other factors involved in selecting a place to retire. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- There is more to planning a secure and comfortable retirement than avoiding state taxes on retirement income. States may not tax retirement income but have high taxes otherwise. Read more about retirement taxes.
©iStock.com/SDI Productions, ©iStock.com/Andranik Hakobyan, ©iStock.com/Liudmila Chernetska