States that don't tax retirement income at all

Eight states impose no income tax on any form of retirement income: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. These states tax neither Social Security, pensions, 401(k) withdrawals, nor IRA distributions. If you live in one of these states, your retirement income is not subject to state income tax, period.

Three additional states—Illinois, Mississippi, and Pennsylvania—do not tax pension or retirement account withdrawals, though they do tax other income. This means if your only income in retirement comes from a pension or an IRA, you pay no state tax on it, but if you have wages or investment income, those are taxed normally.

The remaining 39 states and Washington, D.C. tax at least some forms of retirement income. The specifics vary widely: some tax only Social Security, others exempt only pensions, and still others have age-based exemptions or income thresholds that determine what gets taxed.

Key Takeaways

  • Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming tax no retirement income of any kind.
  • Illinois, Mississippi, and Pennsylvania do not tax pension or retirement account withdrawals, but do tax wages and investment income.
  • Most other states tax at least Social Security, pensions, or 401(k) withdrawals, though many offer partial exemptions based on age or income.
  • Moving to a lower-tax state in retirement can reduce your tax burden, but relocation involves costs and timing that affect the actual savings.

States that exempt pensions but tax other retirement income

Beyond Illinois, Mississippi, and Pennsylvania, several states offer partial exemptions for pensions. Louisiana does not tax military pensions. New Hampshire does not tax pension income but does tax investment income and interest. Massachusetts exempts pensions for residents over 55. Each state draws the line differently, and the exemption often depends on your age or the source of the pension.

If your retirement income comes primarily from a pension—whether from a government job, military service, or a private employer—checking your state's specific rules matters. A pension exemption can save thousands per year, but only if you know it exists and meet the conditions.

States with Social Security exemptions

Most states that tax retirement income do exempt Social Security benefits from state tax. Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, Rhode Island, and Vermont all tax retirement account withdrawals and pensions but leave Social Security untouched. This is a federal rule: no state can tax Social Security benefits, but many states choose to tax the other forms of retirement income that Social Security does not cover.

If Social Security makes up a large portion of your retirement income, living in one of these states means that portion is protected from state tax, even though your pension or IRA withdrawals are not.

Age-based exemptions and income thresholds

Some states offer retirement income exemptions only if you meet an age requirement or fall below an income threshold. Georgia exempts retirement income for residents 65 and older. Arkansas exempts military pensions and some retirement income for residents 59½ and older. North Carolina exempts retirement income for residents 55 and older, but the exemption phases out as income rises.

These thresholds change, and they often have income caps—meaning if you earn above a certain amount, the exemption shrinks or disappears. Before moving or making withdrawal decisions based on an age exemption, confirm the current income limit with your state's revenue department, because these rules are adjusted periodically.

How moving for tax reasons actually works

Relocating to a no-income-tax state can reduce your tax bill, but the savings must cover the cost of moving, any difference in property taxes or sales taxes, and the time and effort involved. A state with no income tax often has higher property tax or sales tax to fund schools and services. Texas and Florida have no income tax but relatively high property taxes. Washington and Nevada have no income tax but higher sales taxes.

Tax savings also depend on where you move from. If you leave a state with high income tax—like California, New York, or New Jersey—the difference is substantial. If you leave a state that already exempts retirement income, the savings may be small or zero. Calculate your total state and local tax burden in both places before deciding.

Establishing residency in a new state requires more than buying a house. You must change your driver's license, voter registration, and mailing address, and you should document your intent to stay (bank statements, utility bills, lease or deed). Some states scrutinize people who claim residency while keeping a home in their old state, especially if they still own property there.

How to find your state's current retirement tax rules

Each state's revenue or taxation department publishes its own rules, and they change. Your state's Department of Revenue website has a section on retirement income or senior tax information. Search "[your state] retirement income tax" to find the official page.

The Tax Foundation and AARP also maintain state-by-state guides, though these are updated less frequently than official sources. If you are considering a move or making a large withdrawal, contact your state's revenue department directly—they can tell you exactly what is taxed and what is not, and whether you meet any exemptions.

Frequently Asked Questions

If I move to a no-tax state, do I have to pay taxes on income I earned in my old state?

No. Once you establish residency in a new state, you owe that state's taxes on income earned after you move. Your old state may still tax income you earned while living there, but you will not owe double tax—your new state will credit taxes paid to the old state. The key is establishing residency properly so your old state recognizes you have left.

Does Social Security count as income for state tax purposes?

No state can tax Social Security benefits—that is a federal rule. However, some states tax the other income you receive in retirement, like pensions and 401(k) withdrawals. Social Security is always protected, regardless of where you live.

If I retire in a state with no income tax but move later, do I owe back taxes?

No. You owe taxes based on where you lived when you earned the income or received the withdrawal. If you lived in a no-tax state when you withdrew from your IRA, that state had no right to tax it. Moving to a taxing state later does not change what you owed in the past.

Can I claim residency in a no-tax state if I only spend part of the year there?

It depends on the state and how much time you spend there. Most states consider you a resident if you spend more than half the year there or if you own a home there and intend to return. Some states look at where you are registered to vote or where your driver's license is issued. If you split time between states, consult a tax professional or your new state's revenue department to confirm your residency status.

Do I have to move to a state to benefit from its tax rules?

Yes. You must establish legal residency in the state to be taxed under its rules. You cannot claim residency in a no-tax state while living elsewhere just to avoid taxes. States verify residency through driver's licenses, voter registration, property ownership, and other records.