States That Don’t Tax Retirement Income

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Retirement Tax Calculator By State

Calculate how much taxes, by state, you’ll have to pay in retirement.

What States Do Not Tax Social Security Income

When it comes to retirement income, the tax implications can greatly affect a retiree’s financial planning. One significant aspect to consider is the taxation of Social Security benefits. While some states tax Social Security income, others offer exemptions and exclusions that provide much-needed relief for retirees. In fact, a total of 41 states, along with the District of Columbia, do not tax Social Security income. This means that retirees living in these states can enjoy their Social Security benefits without worrying about state taxes eating into their income.

The following are states that don’t tax Social Security benefits

  • Alabama. 
  • Alaska. 
  • Arizona.
  • Arkansas. 
  • California. 
  • Delaware. 
  • Florida.
  • Georgia.
  • Hawaii.
  • Idaho.
  • Illinois.
  • Indiana.
  • Iowa.
  • 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.
  • Washington, D.C.
  • West Virginia.
  • Wisconsin.
  • Wyoming.

However, it’s worth noting that there are 9 states that do tax Social Security benefits:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Montana
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont
States That Don'T Tax Social Security

What States Don’t Tax Pension Income

The following states do not tax pensions:

States That Won’t Tax Your TSP Income

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

  • Alaska
  • Florida
  • Illinois
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming
  • Illinois
  • Mississippi
  • Pennsylvania

Free Tool: Estimate Your Withdrawals With Our TSP Retirement Calculator

States With No Income Taxes

The following are tax-free states.

  • Alaska
  • Florida
  • Nevada
  • New Hampshire (earned wages only)
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

States That Won’t Tax Your Retirement Income

The following states are exempt from income taxes on retirement plans like 401k, IRA, annuity, and pensions:

  • Illinois
  • Mississippi
  • Pennsylvania
  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Related Tools:

What States Don'T Tax Pensions

States That Won’t Tax Your Pension But Tax 401ks and IRAs

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

  • Alabama
  • Hawaii

Keep up with inflation, avoid running out of money, and maintain control over your pension, 401k, or IRA funds by reading our guide to guaranteeing income for your retirement.

Retirement Distributions Comparison

Now that you know where to maximize your retirement income, the next question is how to maximize distributions from retirement accounts. The table below compares withdrawals from various retirement plans (excluding Social Security Benefits).

FeaturesAnnuity401kIRARoth IRA
Withdrawal Percentage5.20% – 6.55%4%4%4%
Can Income Increase?YesYesYesYes
Can Income Decrease?NoYesYesYes
How Long Will Money Last?Lifetime30 Years+30 Years+30 Years+
Annual Fees0 – 1.50%1% – 4%1% – 4%1% – 4%
TaxationTaxable/Tax-FreeTaxableTaxableTax-Free
Death BenefitAccount BalanceAccount BalanceAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

Use our free annuity calculator to determine how much income you can generate from your IRA and 401k plans. Then request a quote.

Related Reading: Best Annuity Companies

States That Won’t Tax Your Estate or Inheritance

Even though there’s an estate tax on a federal level, the following states are exempt from “death taxes” such as estate taxes or inheritance taxes:

Helpful tip: Life insurance might be better if you want to leave money to your beneficiaries. In some cases, you don’t need to take a medical exam. Instead, compare instant life insurance quotes to determine if affordable coverage is available. Coverage starts at $9.37 per month. Proceeds are tax-free.

If you have a qualified retirement plan to leave to beneficiaries, read this guide on reducing the tax burden for your heirs.

States That Don’t Have Sales Tax

The following states are exempt from state sales taxes:

  • Alaska
  • Delaware
  • Montana
  • New Hampshire
  • 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
  • Utah
  • West Virginia
  • Wisconsin

Next steps

If you’re nearing retirement or are already retired, it’s essential to understand the tax laws in your state. Depending on where you live, you may be able to minimize the amount of taxes you pay on your retirement income. Request a quote from our team of experts, and we can help you find the best way to reduce your taxable income in retirement. Thanks for reading!

Learn How To Retire Comfortably In Each State

If you have any questions regarding how to spend your retirement funds wisely and retire comfortably, please do not hesitate to ask.

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Frequently Asked Questions

Which states don’t tax my 401K, social security benefits, and military retirement pay?

You have to pay federal taxes in every state. However, some states don’t have state income taxes. These states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Another state that doesn’t have income taxes in New Hampshire.

Do you pay taxes on Social Security?

Some individuals who receive Social Security must pay federal income taxes on their payments. However, no one pays taxes on more than 85 percent of their Social Security benefits. If you file a federal tax return as an “individual” and your “combined income” is more significant than $25,000, you must pay taxes on your benefits.

What state has no income tax?

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have a state income tax.

What are the best states for taxes?

The best states for taxes depend on individual circumstances, but some tax-friendly states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

If your brokerage firm is located in another state, where is your retirement income taxed?

Your retirement income is taxed based on the tax laws of the state in which you reside, not the location of your brokerage firm.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

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

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