Georgia's Tax Treatment of Retirement Income

Georgia does not tax most retirement income. If you receive a pension, 401(k) withdrawal, or IRA distribution, Georgia will not charge you state income tax on that money. The state also excludes Social Security benefits from taxation. This is one of the most retirement-friendly tax policies in the country.

The main exception is that Georgia taxes interest, dividends, and capital gains on investments you hold outside a retirement account. If you have a brokerage account or own rental property, those earnings are taxable. But the retirement account itself — and the money inside it — stays protected from Georgia state tax.

Key Takeaways

  • Georgia does not tax pension income, 401(k) withdrawals, IRA distributions, or Social Security benefits.
  • You still owe federal income tax on most retirement withdrawals, even though Georgia does not tax them.
  • Interest, dividends, and capital gains from non-retirement investments are taxable in Georgia.
  • If you moved to Georgia from another state, you may still owe tax to your former state on retirement income earned while you lived there.

What Retirement Income Georgia Does Not Tax

Pensions — including military pensions, government employee pensions, and private company pensions — are completely exempt from Georgia state income tax. You can receive a pension check every month and pay nothing to Georgia.

401(k) and 403(b) withdrawals are not taxed by Georgia, whether you take them as a lump sum or as regular distributions. The same applies to traditional and Roth IRA withdrawals. Georgia also does not tax Social Security benefits, even if you have other income.

If you have a health savings account (HSA) or Archer medical savings account, withdrawals for may have access to medical expenses are not taxed by Georgia. Withdrawals for non-medical purposes are taxed by the federal government but not by Georgia.

Federal Tax Still Applies to Most Withdrawals

Georgia's exemption does not mean you owe nothing in taxes. The federal government taxes most retirement account withdrawals as ordinary income. A 401(k) withdrawal, for example, is added to your federal taxable income for the year and taxed at your federal rate.

The exception is Roth IRA withdrawals. If you have held the account for at least five years and you are age 59½ or older, your withdrawal is not taxed by the federal government or by Georgia. Roth conversions and early withdrawals have different rules — consult a tax professional if either applies to you.

You are responsible for paying federal tax through withholding or estimated tax payments. Many people have their retirement plan administrator withhold federal tax automatically, which reduces the check they receive but prevents a large bill at tax time.

Investment Income Outside Retirement Accounts

Money you earn outside a retirement account is taxed by Georgia. If you have a regular brokerage account, savings account earning interest, or rental property, the interest, dividends, and capital gains are subject to Georgia state income tax.

Georgia taxes long-term capital gains (profits from selling an asset you held more than one year) and short-term capital gains (held one year or less) the same way — as ordinary income. Interest from savings accounts and bonds is also taxed as ordinary income. may have access to dividends from stocks may receive favorable federal treatment, but Georgia taxes them at your regular rate.

Moving to Georgia From Another State

If you moved to Georgia and started receiving retirement income after the move, you owe nothing to your former state on that income — Georgia is your state of residence now. However, if you received the income while you still lived in another state, you may owe tax to that state.

Some states tax retirement income and some do not. If you moved from a state that taxes pensions or IRA withdrawals, that state may still claim you owed tax during the years you lived there. Check your former state's tax rules or consult a tax professional if you are unsure.

A few states have reciprocal agreements with Georgia or special rules for people who move. For example, some states do not tax military pensions even if you move away. Your former state's tax department website will have information about nonresident taxation.

How to Report Retirement Income on Your Georgia Return

If you have no Georgia tax liability because all your income is exempt, you may not need to file a Georgia return at all. However, if you have any taxable income — from investments, a job, or self-employment — you must file and report all income, including the exempt retirement income, on your return.

Retirement income appears on your federal return (Form 1040) and flows to your Georgia return (Form 500). The Georgia return will show your exempt retirement income separately so the state knows why your federal income is higher than your Georgia taxable income. Your retirement plan or financial institution will send you a 1099-R form showing the amount you withdrew.

If you are unsure whether you need to file, use Georgia's filing requirement worksheet on the Department of Revenue website, or contact a tax professional. Filing even when you do not owe tax can be beneficial if you are due a refund from federal withholding.

Frequently Asked Questions

Do I have to pay Georgia income tax on my pension?

No. Georgia does not tax any pension income, including military pensions, government pensions, and private company pensions. You will owe federal income tax on most pensions, but nothing to Georgia.

What about Social Security — is that taxed in Georgia?

No. Georgia does not tax Social Security benefits. However, the federal government may tax part of your Social Security depending on your total income. Check your federal return to see if any is taxable.

If I withdraw money from my IRA, do I owe Georgia tax?

No, Georgia does not tax IRA withdrawals. You will owe federal income tax on traditional IRA withdrawals and on Roth IRA withdrawals before age 59½ (with some exceptions). may have access to Roth withdrawals at age 59½ or older are not taxed by anyone.

I moved to Georgia last year and started getting a pension. Do I owe my old state anything?

Not for income earned after you moved. Your old state can only tax you on income earned while you were a resident there. If you received the pension while living in the other state, you may owe that state tax. Check your former state's rules or ask a tax professional.

Are my investment earnings taxed in Georgia?

Yes. Interest from savings accounts, dividends from stocks, and capital gains from selling investments are all taxed by Georgia as ordinary income. This applies only to investments outside retirement accounts like IRAs and 401(k)s.