It's True: These 13 States Don't Tax Retirement Income

As we get older, some of us may start wondering about which states will tax our retirement income and which states won't. Some of us may be thinking about relocating for retirement, so the tax environment is a factor to consider. Others of us may be planning to stay put, but are curious about how much of our future income we'll get to keep.

Here are some answers. They're grouped into categories because there are several kinds of retirement income.

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9 states don't tax income

Let's start with income. If you live in one of the following states, you can rejoice because they don't have a state income tax -- and not just for retirees:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Among these nine states, eight have no income tax at all. New Hampshire is not among them because it does tax interest and dividend income, but not earned income. That policy is going away, though, and for 2025 and beyond, dividend and interest income will not be taxed. (Note, though, that some legislators are proposing to bring back the tax for higher-income residents.)

Every state needs income to keep the lights on, so if it's not taxing your income, it may end up collecting a significant sum from you in other ways, such as via sales taxes and/or property taxes. Always assess a state's total tax picture.

4 states don't tax retirement income

If you're a retiree, or will be one soon, you might be most curious about which states tax retirement income. Here's that answer -- the following states do tax income in general, but they don't tax retirement income:

• Illinois
• Iowa
• Mississippi
• Pennsylvania

41 states don't tax Social Security

Next up is a big list: the 41 states -- along with Washington, D.C. -- that don't tax Social Security benefits. If you expect much of your retirement income to come from these benefits, you'll be happy if your state is on this list:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• South Dakota
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin
• Washington, D.C.
• Wyoming

If you don't know how much you can expect from Social Security, it's smart to set up a my Social Security account at the Social Security Administration (SSA) website. It gives you access to estimates of your future benefits. The average monthly retirement benefit recently was $1,979, or just around $23,750 annually.

Note, too, that Social Security's coffers are shrinking, and if nothing is done, benefits may be shrinking, too, in a few years. Also worrisome is that President Trump has some plans that could hurt Social Security's outlook.

These 9 states do tax Social Security benefits

The 9 states below do tax Social Security benefits. But it's probably not as bad as you fear if your state is among them. That's because many retirees in these states will pay little to nothing of their benefits to the state since there are often income or age thresholds, with older and/or lower-income residents excluded from the tax.

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

Better still, this list of states has been shrinking. As of 2016, 13 states taxed Social Security. So perhaps by the time you retire, your state won't tax it.

Unfortunately, the federal government does tax some Social Security benefits. Not all, though. So you might escape that tax, too.

13 states don't tax any retirement income

Put all those lists together and you'll arrive at these states that don't tax any retirement income. They will not touch your Social Security benefits, earned income, dividends, interest, retirement account withdrawals, and pension benefits:

• Alaska
• Florida
• Illinois
• Iowa
• Mississippi
• Nevada
• New Hampshire
• Pennsylvania
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

The list is only for state taxation, though; the federal government still taxes income for most of us.

Thinking about your retirement

While it's good to have a handle on retirement taxes where you live, you need to plan for much more than that. Each of us should have a solid retirement plan, arrived at after estimating your financial needs and determining how you'll get that retirement income. Ideally, aim to have multiple income streams, perhaps from dividend-paying stocks, pensions, Social Security, annuities, and retirement account withdrawals.

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