What states do not tax retirement income is one of the most practical questions you can ask before you stop working. The answer matters more than most people realize: nine states currently levy no income tax at all on any income, including pensions and withdrawals, according to the nonprofit Tax Foundation's 2025 state tax data.
Add states that exclude retirement income entirely, and roughly half the country becomes a legitimate option. The problem is that the rules are fragmented and updated constantly, and a move made on outdated advice can cost thousands in unnecessary state tax.
This article breaks down the states, the differences between pension and Social Security treatment, and the traps to avoid before you change your address.
The States With No Income Tax at All
The cleanest answer is the nine states with no personal income tax on any income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. In these states, your pension, 401(k) withdrawals, and IRA distributions face zero state income tax.
Two caveats deserve attention. First, New Hampshire taxes interest and dividends but has been phasing that out, with the tax fully eliminated for tax years beginning in 2025, per the state's Department of Revenue Administration. Second, Washington charges a 7% capital gains excise tax above a high threshold on long-term gains, which can touch retirees who sell appreciated assets.
For most retirees, the practical effect is simple: your retirement account withdrawals are yours to keep, state-tax-free.
- Florida and Texas win on volume of retirees and no income tax combined.
- Nevada, Wyoming, and South Dakota offer no income tax with lower populations and cost structures.
- Tennessee eliminated its investment income tax entirely in 2021.
How to apply this: confirm the current year's rules directly on each state's revenue department website before you rely on any tax-free claim, including this one.
Planning around what states do not tax retirement income often starts with the nine states that levy no personal income tax at all. Retirees who settle in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming keep more of every withdrawal.
Recent reforms mean the list of what states do not tax retirement income keeps shifting, so outdated guidance can quietly cost you money. West Virginia's phase-out of its Social Security tax is a clear example of how quickly the landscape moves.
States That Exempt Retirement Income Specifically
Many states collect income tax but carve out retirement income in full or in part. Understanding what states do not tax retirement income means separating states that exempt everything from those that exempt only certain categories.
States widely reported to exclude pension and retirement account income entirely include Illinois, Mississippi, Pennsylvania, and Iowa, which completed its retirement income exemption phase-in. Several others — including Alabama, Hawaii, Kentucky, Massachusetts, Michigan, and New York — exempt Social Security and offer partial or full breaks on pensions depending on age and income limits.
The distinction matters because a state may exempt public pensions but tax private ones, or exempt pension income but not 401(k) withdrawals. Pennsylvania, for example, exempts retirement income for those who meet age requirements but still taxes some other income.
Consider a retiree with a $60,000 pension and $20,000 in IRA withdrawals. In a state that exempts pensions but not IRA distributions, part of that income remains taxable — a detail glossed over in most "best states" lists.
How to apply this: list your income sources by type (pension, 401(k), IRA, Social Security, annuity) and match each one against a state's specific exemptions, not its headline reputation.
Newer Tax Changes Reshaping Retirement Havens
State tax law is moving fast, and several recent changes have quietly redrawn the retirement map. This is where stale advice causes real damage.
West Virginia eliminated its tax on Social Security benefits and continues phasing down other taxes. Kentucky moved to full Social Security exemption. Missouri and Nebraska have also exempted Social Security benefits in recent legislation. Meanwhile, some states with no income tax have added narrow taxes — Washington's capital gains excise being the clearest case.
The trend cuts both ways. A state that is generous today can tighten rules when budgets strain, and vice versa. The Tax Foundation tracks state tax competitiveness annually and is one of the few neutral sources that updates across all fifty states, making it a reliable starting point.
A common scenario: a couple plans a move based on a 2019 article, only to discover their target state changed its pension exclusion in the interim.
How to apply this: check the effective date on any exemption, and re-verify it within a year of your planned move.
Knowing what states do not tax retirement income is only half the equation, since lifestyle costs can erase the savings. A tax-free state with weak healthcare or a steep cost of living may end up costing you more overall.
If you receive a military or public pension, what states do not tax retirement income may work differently for you than for private-sector retirees. Several states exempt government pensions entirely, so confirm your specific plan before relocating.
Reading the Fine Print Before You Move
A state's income tax is only one line on a longer bill. Property taxes, sales taxes, and estate taxes often outweigh income tax savings, and this is the mistake that undoes the benefit of what states do not tax retirement income.
- Property taxes can run several times higher in a no-income-tax state than in a taxed one; Texas and New Hampshire are well-documented examples.
- Sales taxes in Tennessee and Washington are among the highest in the country.
- Estate taxes survive in a handful of states, and some levy them at lower thresholds than the federal level.
The table below compares the practical factors to check before committing to a move.
| Factor to compare | What it tells you | Action to take |
|---|---|---|
| State income tax on pensions | Whether retirement income is taxed | Check the state revenue site |
| Social Security treatment | Whether benefits are exempt | Confirm current law, not old articles |
| Property tax rate | Real ongoing cost of ownership | Pull county assessor data |
| Sales tax rate | Everyday cost of living | Compare a typical spending basket |
| Estate or inheritance tax | What heirs may owe | Review the state threshold |
| Cost of living | Whether savings are real | Use a regional index |
How to apply this: build the table above with your own numbers and compare at least two candidate states before deciding.
How Retirement Income Sources Differ by State
Not all retirement income is treated equally, and understanding what states do not tax retirement income requires separating your income streams. The IRS explains that distributions from traditional IRAs and 401(k)s are generally taxable as ordinary income at the federal level, but each state decides independently whether to follow that treatment.
- Social Security: most states exempt it, but a minority still tax it; the Social Security Administration publishes an annual guide covering state treatment.
- Pensions: public pensions are exempt more often than private ones.
- 401(k) and IRA withdrawals: exempt only in states with no income tax or broad retirement exclusions.
- Annuities: treatment varies widely and is a frequent source of confusion.
The Social Security Administration and the IRS both publish retirement income guidance, but neither will tell you your state's specific rule — that always comes from the state itself.
In one case, a retiree moved for a pension exemption and later learned that Roth conversions and annuity income were still taxed, reducing the expected savings.
How to apply this: create a one-page sheet listing each income source against the federal and state rule so nothing slips through.
Weighing Tax Savings Against Lifestyle
Tax-free retirement income is a means, not an end. A state with zero income tax but limited healthcare access, harsh weather, or a high cost of living can cost more in real terms than a taxed state that fits your life.
The MIT Living Wage Calculator offers county-level cost data that helps translate tax savings into actual purchasing power, which is far more useful than comparing headline rates.
Retirees who move purely for tax reasons often report the adjustment is harder than expected, particularly around healthcare networks and family distance. Industry surveys consistently show that proximity to family and healthcare quality rank near the top of relocation priorities — above tax treatment for many households.
How to apply this: calculate your projected annual tax savings, then subtract the difference in housing, healthcare, and living costs for your top two states before you commit.
Claiming residency based on what states do not tax retirement income only works if you truly establish domicile there. Leaving a driver's license or voter registration behind in a high-tax state invites a residency challenge.
Weighing what states do not tax retirement income against lifestyle factors helps you avoid trading tax savings for higher living costs.
Frequently Asked Questions About what states do not tax retirement income
Do any states tax Social Security benefits?
Yes — a small number of states still tax Social Security benefits, though the count has fallen as states pass exemptions. If Social Security is a major part of your income, verify your candidate state's current rule directly, because this is the area where what states do not tax retirement income changes most often.
Does moving mid-year change how my retirement income is taxed?
It can. Most states tax income based on residency during the year, so a mid-year move may require filing part-year returns in both states and allocating income by date. Keep records of your move date and income timing, since this is a common surprise for new retirees comparing what states do not tax retirement income.
Are military and public pensions treated differently?
Frequently yes. Several states exempt military and public pensions while taxing private ones, and a few offer special deductions for uniformed service. If you receive a government pension, check that specific category rather than assuming the state's general retirement exemption applies.
Wondering what states do not tax retirement income often leads retirees to check how military and public pensions are handled. Knowing what states do not tax retirement income helps you confirm whether your government pension qualifies for special exemptions.
Before asking what states do not tax retirement income, confirm you can genuinely establish domicile in your new state. Understanding what states do not tax retirement income means little if a high-tax state successfully challenges your residency claim.
What about Roth IRA withdrawals at the state level?
Most states follow federal treatment and exclude qualified Roth withdrawals, but a handful apply their own rules. This nuance rarely appears in broad lists of what states do not tax retirement income, so confirm Roth treatment separately for any state you are seriously considering.
Can I keep a home in one state and claim residency in another?
Only if you genuinely establish domicile — the state where you intend to remain. Keeping a house, driver's license, or voter registration in a high-tax state can trigger a residency challenge. States audit this actively, so change your legal ties, not just your mailing address.
Conclusion
The states that exempt retirement income vary widely, and the details matter more than the headlines.
- Nine states have no personal income tax at all, and New Hampshire's investment tax is fully phased out.
- Several taxed states still exempt pensions, Social Security, or both — but usually with age or income conditions.
- Recent legislation has changed the map, so verify rules with an effective date.
- Property, sales, and estate taxes often outweigh income tax savings.
Your next step: pick two candidate states, pull their revenue department pages this week, and build the comparison table with your own income sources. Answering what states do not tax retirement income accurately is the difference between a smart move and an expensive one.
