States That Don’t Tax Retirement Income: What to Know and How To Plan

Shawn Plummer

CEO, The Annuity Expert

Do you know which states don’t tax retirement income? If not, then read on to find out! Many states have a law that states that they do not tax any source of retirement income. This includes income from IRAs, 401ks, pensions, and annuities. So it doesn’t matter how much money you make or where in the United States you live – if your state is one of these states, then your retirement income will be free of taxation.

States That Won’t Tax Your Social Security Income

The following states are exempt from income taxes on Social Security Benefits:

  1. Colorado
  2. California
  3. Connecticut (50% of Benefits)
  4. Florida
  5. Kansas
  6. Minnesota (33% of Benefits)
  7. Missouri (Based on Annual Income Amount)
  8. Montana
  9. Rhode Island (Based on Annual Income Amount)
  10. Vermont
  11. West Virginia (Starting in 2022)
  12. New Jersey

States That Won’t Tax Your Pension Income

The following states are exempt from income taxes on pension income:

  1. Alaska
  2. Florida
  3. Nevada
  4. South Dakota
  5. Tennessee
  6. Texas
  7. Washington
  8. Wyoming
  9. New Hampshire
  10. Alabama
  11. Illinois
  12. Hawaii
  13. Mississippi
  14. Pennsylvania

States That Won’t Tax Your TSP Income

The following states are exempt from income taxes on Thrift Savings Plan (TSP) Income:

  1. Alaska
  2. Florida
  3. Nevada
  4. New Hampshire
  5. South Dakota
  6. Tennessee
  7. Texas
  8. Washington
  9. Wyoming
  10. Illinois
  11. Mississippi
  12. Pennsylvania

States That Don’t Have State Income Taxes

The following states are exempt from state income taxes.:

  1. Alaska
  2. Florida
  3. Nevada
  4. New Hampshire
  5. South Dakota
  6. Tennessee
  7. Texas
  8. Washington
  9. Wyoming

States That Won’t Tax Your 401(k), IRA, or Pension Distributions

The following states are exempt from income taxes on 401k, IRA, annuity, and pension income:

  1. Illinois,
  2. Mississippi and
  3. Pennsylvania

States That Won’t Tax Your Pension But Taxes 401(k)s and IRAs

The following states are exempt from income taxes on pension income but will be taxed on 401k and IRA income:

  • Alabama
  • Hawaii

States That Won’t Tax Your Estate or Inheritance

The following states are exempt from estate taxes and inheritance taxes:

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Colorado
  7. Delaware
  8. Florida
  9. Georgia
  10. Idaho
  11. Indiana
  12. Iowa
  13. Kansas
  14. Kentucky
  15. Louisiana
  16. Maryland
  17. Michigan
  18. Mississippi
  19. Missouri
  20. Montana
  21. Nebraska
  22. Nevada
  23. New Hampshire
  24. New Jersey (Estate Tax Only)
  25. New Mexico
  26. North Carolina
  27. North Dakota
  28. Ohio
  29. Oklahoma
  30. Pennsylvania
  31. South Carolina
  32. South Dakota
  33. Tennessee
  34. Texas
  35. Utah
  36. Virginia
  37. West Virginia
  38. Wisconsin
  39. Wyoming

States That Don’t Have Sales Tax

The following states are exempt from state sales taxes:

  1. Alaska
  2. Delaware
  3. Montana
  4. New Hampshire
  5. Oregon

States That Don’t Tax Military Retirement Income

States that don’t tax military retirement pay include:

  • Alabama
  • Arkansas
  • Connecticut
  • Hawaii
  • Illinois
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • New Jersey
  • New York
  • North Dakota
  • Ohio
  • Pennsylvania
  • West Virginia
  • Wisconsin

Learn How To Retire Comfortably In Each State

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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