Which states have no tax on pensions or Social Security
Thirty-nine states do not tax Social Security income at all. Thirty-seven states do not tax military pensions, and a smaller group exempt all retirement income from state tax. However, the rules vary widely—some states tax only certain types of pensions, some have income thresholds that let you keep benefits tax-free up to a certain amount, and some exempt only federal pensions while taxing private ones.
The states with the most generous pension treatment are Alaska, Florida, Illinois, Mississippi, Nevada, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wyoming, which have no state income tax at all. If you live in one of these states, your pensions and Social Security are untouched by state tax regardless of how much you earn. Beyond those eleven, another 28 states exempt Social Security from tax, though they may still tax other retirement income.
If you are considering a move based on tax treatment of retirement income, the actual savings depend on your total income, the type of pension you receive, and whether you have other income sources like investments or part-time work. A state that exempts pensions but taxes other income may not save you money if most of your income comes from savings accounts or rental property.
Key Takeaways
- Eleven states have no income tax at all, so pensions and Social Security are never taxed there: Alaska, Florida, Illinois, Mississippi, Nevada, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wyoming.
- Twenty-eight additional states exempt Social Security from tax, but may tax military pensions, private pensions, or both, depending on the state.
- Some states tax pensions only above a certain income level or only if you did not receive the pension from your own state of employment.
- Moving to a tax-friendly state saves money only if your actual tax bill there is lower than where you live now—check your total income, not just pension income.
States with no income tax
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income tax whatsoever. This means pensions, Social Security, wages, and investment income are all free from state tax. If you live in one of these states, you pay no state income tax on retirement income no matter how much you earn.
Illinois, Mississippi, and Pennsylvania also have no tax on pensions and Social Security, though they do have a state income tax on wages and other income. In Illinois and Mississippi, the income tax applies only to wages, not to retirement income. Pennsylvania taxes wages and some investment income but specifically exempts all retirement income, including pensions and Social Security.
These eleven states are the only ones where you can be certain that all forms of retirement income are untouched by state tax. If you live elsewhere, you will need to check your specific state's rules, because the exemptions are narrower.
States that exempt Social Security but tax some pensions
Twenty-eight states exempt Social Security from state income tax but do tax at least some types of pensions. These states are Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, and Virginia.
Within this group, the rules for pensions vary. Some states tax all pensions equally. Others exempt military pensions but tax civilian ones. Still others have income thresholds—for example, you might owe tax on a pension only if your total income exceeds a certain amount, or only if you did not work in that state when you earned the pension.
New Hampshire and Tennessee deserve special mention: they have no income tax on wages or salaries, but New Hampshire taxes interest and dividends while Tennessee does not. Neither taxes pensions or Social Security. If you receive only pension and Social Security income, both states are equally favorable, but if you have investment income, Tennessee is better.
States with income thresholds for pension tax
Several states let you exclude a certain amount of pension income from tax, or exempt pensions entirely if your total income stays below a threshold. Colorado, for example, allows a pension exemption up to a certain dollar amount depending on your age. Georgia exempts military pensions and allows a retirement income exclusion for those over 65. Kentucky exempts military pensions and some federal pensions.
The threshold approach means you might owe no tax on a modest pension but owe tax if you have a large pension or other income sources. For example, if a state exempts the first $20,000 of pension income and you receive a $25,000 pension, you would owe tax on $5,000. If you also have investment income, that counts toward the threshold too.
To know whether you fall below the threshold in your state, you need to add up all your income sources—pensions, Social Security, wages, interest, dividends, and rental income—and compare the total to your state's limit. This is where a tax professional or your state's tax agency can give you a clear answer for your situation.
Military and federal pensions
Military pensions receive special treatment in many states. Thirty-seven states exempt military pensions from state income tax entirely. This includes states that do tax civilian pensions, so a military retiree may owe no state tax while a civilian retiree in the same state does.
Federal pensions—including those from the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS)—are treated differently depending on the state. Some states exempt all federal pensions, some exempt only those earned before a certain date, and some tax them like any other income. If you receive a federal pension, check your state's specific rules rather than assuming it is treated the same as a military pension.
Railroad Retirement benefits are also treated separately in some states. A few states that tax other pensions exempt railroad retirement income. If you receive railroad retirement rather than Social Security, verify your state's treatment of that income specifically.
How to find your state's exact rules
The easiest way to learn your state's pension and Social Security tax treatment is to contact your state's department of revenue or tax agency directly. Most states have a website with a section on retirement income, and many have a phone line where you can ask about your specific situation. You can also read your state's tax instruction booklet, which usually has a section on retirement income.
If you are considering moving to a different state, contact that state's tax agency before you move. Bring information about your pension type, amount, and source, as well as any other income you receive. The tax agency can tell you whether you would owe state tax there and roughly how much.
A tax professional who works in your state can also review your situation and tell you what you would owe. This is especially useful if you have multiple income sources or are deciding between two states, because the comparison requires adding up all your income and running it through each state's tax rules.
Moving for tax savings: what actually matters
Moving to a state with no pension tax saves money only if your total tax bill there is lower than where you live now. A state that exempts pensions but taxes investment income heavily might cost you more if most of your money is in savings accounts or rental property. Similarly, a state with no income tax but high property taxes might not save you money if you own a home.
Before moving, calculate your estimated state tax bill in both your current state and the state you are considering. Include income tax, property tax, sales tax, and any other state taxes. Some states with no income tax have higher sales taxes to make up the difference. The comparison should cover all taxes, not just income tax on pensions.
Also consider non-tax factors: cost of living, healthcare access, proximity to family, and climate. A state that saves you $2,000 a year in taxes but costs $10,000 more per year in housing is not a financial win. The tax savings need to be large enough to justify the move and any costs that come with it.
Frequently Asked Questions
Does moving to a no-income-tax state save me money if I have a small pension?
Only if your total tax bill there is lower than where you live now. A state with no income tax might have higher property tax or sales tax. Calculate your full tax bill in both places before deciding. If you own a home, property tax differences often matter more than income tax.
If I move to a state that taxes pensions, do I owe tax on a pension I earned in another state?
Usually yes, if you live in a state that taxes pensions, you owe tax on all pension income regardless of where you earned it. Some states have reciprocal agreements or exemptions for pensions earned in other states, but this is rare. Check your new state's rules before moving.
Are federal employee pensions treated the same as military pensions?
No. Military pensions are exempt in 37 states, but federal employee pensions (CSRS or FERS) are treated differently in many states. Some exempt them, some tax them, and some have special rules based on when the pension was earned. Contact your state's tax agency to confirm.
If my state taxes pensions, can I avoid the tax by moving after I retire?
Moving after you retire can help if your new state does not tax pensions. However, some states tax pensions earned while you were a resident there, even if you move away later. The rules vary, so check both your old and new state's rules before relying on this strategy.
Does Social Security count as income for other state taxes?
Even in states that do not tax Social Security income, it may count toward income limits for other benefits or tax credits. For example, it might affect whether you may have access to for a property tax exemption or a low-income heating information program. Check your state's rules for any programs you use.