which states don't tax retirement income is a question that matters more than most retirees realize, because where you live can quietly reshape your entire budget. Nine states currently levy no income tax at all, and a much larger group exempts at least some retirement dollars from state taxation.
The gap between a taxed and untaxed state can run into thousands of dollars a year for a household drawing on a pension, a 401(k), and Social Security together.
The problem is that the rules are scattered across dozens of state tax codes, and they change. A state that exempted pensions five years ago may have phased that break out since.
This guide breaks down the states with no income tax, the states that exempt retirement income, the states that tax it anyway, and how to verify your own situation before you move. You will also get a practical checklist you can act on this week.
The Nine States With No Income Tax at All
The cleanest answer to which states don't tax retirement income starts with the states that collect no individual income tax whatsoever. Those are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
New Hampshire is the outlier worth flagging. It has no tax on wages, but it historically taxed interest and dividends — a levy that has been scheduled to wind down. If your retirement income leans heavily on investment earnings rather than a paycheck, confirm New Hampshire's current treatment before you pack.
Two more caveats matter here. First, "no income tax" does not mean "no tax." These states still fund services through sales tax, property tax, and fees, and property taxes in Texas and New Hampshire are notably high. Second, Alaska pays residents a dividend from oil revenue rather than taxing them, which is unusual but real.
- Florida and Texas attract the most retirees, so housing costs and insurance have risen accordingly
- South Dakota and Wyoming offer low population density and no income tax
- Washington taxes some capital gains above a threshold, so large investment income needs a closer look
How to apply this: Pull your last tax return and list every income source by category — wages, pension, IRA withdrawals, annuity, capital gains, Social Security. You need that list before any state comparison means anything.
States That Exempt Retirement Income Even With an Income Tax
Most states do collect income tax, but many carve out retirement dollars. The Tax Foundation tracks these rules state by state and notes that the trend has been toward broader retirement exemptions in recent years.
Illinois, Mississippi, and Pennsylvania are commonly cited as fully exempting retirement income from state tax. Pennsylvania is unusual because it excludes retirement distributions entirely while still taxing wages. Illinois exempts most retirement plan distributions, including 401(k) and IRA withdrawals, from state income tax.
Other states exempt only specific categories. Georgia and Michigan have moved toward exempting Social Security and, in some cases, broader retirement income for older filers. Alabama exempts defined-benefit pensions and, for taxpayers past a certain age, defined-contribution withdrawals too.
The pattern to understand is that "retirement income" is not one thing. A pension, a traditional IRA withdrawal, a Roth withdrawal, an annuity payment, and a Social Security check can each be treated differently by the same state.
- Check whether the exemption applies to all retirement income or only pensions
- Look for age thresholds — many breaks start at 59½, 65, or 67
- Confirm whether the exemption has an income cap that phases out for higher earners
How to apply this: On your state's revenue department website, search for "retirement income subtraction" or "pension exclusion" rather than "retirement tax," which often returns the wrong page.
Most states do collect income tax, but many carve out retirement dollars; the Tax Foundation tracks which states don't tax retirement income on a state-by-state basis. That trend has been toward broader exemptions, so knowing which states don't tax retirement income can shape where you settle.
State tax law changes, and a rule that was accurate two years ago may already be gone, so confirm which states don't tax retirement income before you rely on it. The most reliable path is each state's department of revenue, which publishes current guidance on which states don't tax retirement income.
States That Still Tax Retirement Income
Roughly a dozen states tax most or all retirement income, and knowing which states don't tax retirement income is only useful if you also know the reverse. Connecticut, Minnesota, Nebraska, and Rhode Island are frequently grouped among the more aggressive states, though several of them offer exemptions or credits that soften the blow.
The critical variable is Social Security. The IRS explains that federal taxation of Social Security benefits depends on your "combined income," a formula that adds adjusted gross income, tax-exempt interest, and half your benefits. A handful of states mirror that logic, while most now exempt Social Security entirely at the state level.
Pensions are the other flashpoint. A state may exempt Social Security and still tax a private pension in full. That single distinction can swing your annual state tax bill by several thousand dollars.
| State | Income tax? | Social Security taxed? | Pension treatment | Action to take |
|---|---|---|---|---|
| Florida | No | No | No state tax | Compare property tax and insurance |
| Texas | No | No | No state tax | Check property tax rate for your county |
| Illinois | Yes | No | Largely exempt | Confirm your plan type qualifies |
| Pennsylvania | Yes | No | Exempt | Verify distributions vs. wages |
| Minnesota | Yes | Partially | Taxed with credits | Model your combined income |
| Connecticut | Yes | Exempt | Taxed with exclusions | Check the pension exclusion rules |
| Nebraska | Yes | Exempt | Partially taxed | Review age-based deductions |
How to apply this: Build a simple spreadsheet with one row per income source and one column per candidate state. Fill in the treatment from each state's official revenue site, not from a blog summary.
How to Verify a State's Rules Before You Move
State tax law changes, and a rule that was accurate two years ago may already be gone. The most reliable path is to read the primary source: each state's department of revenue publishes its current instructions and forms, and those documents govern.
The IRS also publishes guidance on how state taxation interacts with federal treatment of distributions, which helps when a state's rules reference federal definitions.
A practical sequence works well. Start with the state revenue site, then confirm with a CPA licensed in that state, then model the move with real numbers. A common scenario is a retiree who assumes a state is tax-free because a friend said so, then discovers a local income tax or a capital gains levy after closing on a house.
- Read the state's individual income tax instructions for the current year
- Search the state's site for the specific form that handles subtractions or credits
- Ask a local CPA one focused question rather than a general one
- Recheck the rules in the year you actually establish residency
Tools help here. TurboTax and H&R Block both support multi-state returns and will flag state-specific retirement adjustments as you enter data, which is a useful cross-check on your own reading.
How to apply this: Bookmark your top two candidate states' revenue department pages today and set a calendar reminder to reread them each January.
Establishing residency is not the same as owning property there, and states weigh domicile factors when deciding which states don't tax retirement income for you. Where you vote, register vehicles, and spend your days all feed into the question of which states don't tax retirement income.
Usually not, because most states follow the federal treatment and Roth withdrawals are already tax-free, which shapes which states don't tax retirement income in practice. The exception is a state that taxes all distributions regardless of federal treatment, so check which states don't tax retirement income carefully.
Residency, Domicile, and the Traps That Catch Movers
Establishing residency is not the same as owning property there. States look at domicile — where you intend to return, where you vote, where your vehicles are registered, and how many days you spend there.
Snowbirds get audited on this regularly. A taxpayer who keeps a home, a driver's license, and voter registration in a high-tax state while spending winters in Florida may still owe tax to the original state. Some states use a day-count threshold, and some use a facts-and-circumstances test with no bright line at all.
Part-year residency adds another layer. In the year you move, you typically file as a part-year resident in both states and allocate income by the date it was received.
- Change your driver's license and voter registration promptly
- Keep a day-count log if you split time between two states
- Document the date you established domicile with utility bills and a lease or deed
- File a part-year return in the state you left
How to apply this: Start a dated folder — digital or paper — the day you decide to move, and drop in every document that supports your new domicile.
No, state tax follows residency rather than your prior filing history, so which states don't tax retirement income depends on where you actually live. A credit in your new state for tax paid to your old one is a one-time mechanism and doesn't change which states don't tax retirement income going forward.
Establishing residency is not the same as owning property, and states examine domicile factors closely, which states don't tax retirement income matters here.
Frequently Asked Questions About which states don't tax retirement income
Do any states tax Social Security benefits?
Yes, a small number still do, though the list has shrunk considerably over the past decade. Most states now exempt Social Security entirely, and several of the remaining ones exempt it below an income threshold.
If you are weighing which states don't tax retirement income, confirm the Social Security treatment separately from the pension treatment, because a state can exempt one and tax the other.
Does a Roth IRA withdrawal get taxed by states?
Usually not, because most states follow the federal treatment and Roth withdrawals are already tax-free at the federal level. The exception is a state that taxes all distributions regardless of federal character, which is rare but exists. Check your specific state's subtraction schedule before assuming a Roth is invisible to state tax.
Most states follow federal treatment, so Roth withdrawals are usually tax-free, and which states don't tax retirement income is a key question. The exception is a state taxing all distributions regardless of federal rules, so which states don't tax retirement income deserves checking.
State tax follows residency rather than prior filing history, so which states don't tax retirement income depends on your new home. A transition-year credit may apply, but which states don't tax retirement income still governs your ongoing treatment.
What about military retirement pay?
Many states offer a specific exemption for military retirement, and roughly half exempt it fully. The rules often depend on age, disability status, or whether the pay is combat-related. This is one of the most commonly overlooked breaks when people research which states don't tax retirement income, so ask directly rather than assuming.
Can I keep my current state's tax treatment if I move?
No. State tax follows residency, not your prior filing history. You may be able to claim a credit in your new state for tax paid to your old one in a transition year, but that is a one-time mechanism, not a permanent carryover. Plan for the new state's rules to apply from your move date forward.
Do local taxes change the answer?
Frequently yes. Some cities and counties levy their own income or payroll tax on top of the state rate, and a few states with no income tax still have local taxes of various kinds. When evaluating which states don't tax retirement income, check the county and municipality too, not just the state line.
Conclusion
The short list of states with no income tax is easy to memorize, but the real answer depends on what kind of income you actually draw.
- Nine states collect no individual income tax, with New Hampshire and Washington carrying important caveats
- Several taxed states exempt retirement income broadly, including Illinois and Pennsylvania
- Pensions, IRAs, and Social Security are often treated differently by the same state
- Domicile rules decide the outcome, not just a mailing address
Your next step is concrete: list your income sources, check two candidate states on their official revenue sites, and confirm the result with a CPA licensed there before you commit. Getting which states don't tax retirement income right before the move is far cheaper than fixing it afterward.
