Where you live in retirement can make a real difference to how far your money goes. Depending on the state, your Social Security, pension and 401(k) or IRA withdrawals could be taxed, partly taxed, or not taxed at all.
In 2026, 13 states leave most retirement income alone: nine because they don’t have a state income tax, and four because they specifically exempt it. At the other end, 8 states still tax Social Security for at least some residents.
Here’s the full picture, plus the catches that can make a “tax-free” state more expensive than it looks.
The 9 states with no income tax
These states don’t tax income at all, so Social Security, pensions and retirement account withdrawals are all free of state income tax:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Two of these come with small footnotes. New Hampshire used to tax interest and dividends, but that tax has now been repealed, so it joins the full no-income-tax list. Washington has no income tax, but it does tax large long-term capital gains on things like stocks and bonds. Retirement accounts and real estate are exempt, and the tax only kicks in above a high threshold (about $278,000 of gains in 2025), so most retirees won’t be affected.
The 4 states with income tax that exempt retirement income
These states do have an income tax, but they leave Social Security and most retirement income untouched:
| State | What’s exempt | What’s still taxed |
|---|---|---|
| Illinois | Social Security, pensions, IRA and 401(k) withdrawals | Wages and investment income (flat 4.95%) |
| Iowa | Social Security at any age; retirement plan income if you’re 55 or older | Other income (flat 3.8%) |
| Mississippi | Social Security, pensions, IRA and 401(k) withdrawals | Other income above $10,000 (4%, falling to 3.75% in 2027) |
| Pennsylvania | Social Security, pensions, IRA and 401(k) withdrawals | Wages and investment income (flat 3.07%), plus some local income taxes |
If most of your income in retirement comes from Social Security and retirement accounts, you could pay little or no state income tax in any of these four. But if you still work part-time or have a lot of investment income, that part will be taxed.
Two more states with partial breaks
These don’t exempt everything, but they’re still friendlier than most:
- Arkansas doesn’t tax Social Security or military retirement pay. It also exempts up to $6,000 a year of pension and traditional IRA income received after age 59½ (or because of death or disability). There’s no estate or inheritance tax.
- South Carolina doesn’t tax Social Security, and all military retirement pay is exempt. On top of that, you can deduct up to $3,000 of qualifying retirement income a year before age 65, or up to $10,000 at 65 and older.
The 8 states that still tax Social Security
Most states don’t tax Social Security at all. As of 2026, only eight still do, and even in these, many residents are exempt because of income limits or age rules. West Virginia finished phasing out its tax on Social Security on January 1, 2026, so it’s no longer on the list.
| State | Who’s exempt (main rule) |
|---|---|
| Colorado | Residents 55 to 64 with income up to $75,000 (single) or $95,000 (joint) can deduct benefits; older residents get broader relief |
| Connecticut | Exempt below $75,000 (single) or $100,000 (couples); above that, no more than 25% of benefits is taxed |
| Minnesota | Exempt at incomes up to about $84,490 (single) or $108,320 (couples) for tax year 2025 |
| Montana | Taxed above $25,000 of income (single) or $32,000 (married) |
| New Mexico | Fully exempt below $100,000 (single) or $150,000 (married) |
| Rhode Island | Exempt if you’ve reached full retirement age and earn below about $107,000 (single, tax year 2025) |
| Utah | Fully exempt below $54,000 (single) or $90,000 (joint) |
| Vermont | Fully exempt up to $55,000 (single), with partial relief up to $70,000 |
Thresholds change often and some are adjusted every year, so check your state’s Department of Revenue for the current figures before you plan around them.
The catches to watch for
A state that doesn’t tax your retirement income isn’t automatically the cheapest place to retire. A few things can tip the balance:
- Federal tax still applies everywhere. No state can protect you from federal tax on Social Security. It depends on your “combined income”: your adjusted gross income, plus any tax-exempt interest, plus half your Social Security. For single filers, up to 50% of benefits can be taxed between $25,000 and $34,000, and up to 85% above $34,000. For married couples filing jointly, the bands are $32,000 to $44,000 and above $44,000.
- Other taxes fill the gap. States without an income tax often rely more on sales and property taxes. Tennessee’s state sales tax is 7%, Nevada’s is 6.85%, and combined local rates in Texas can reach 8.25%. Texas is also known for high property taxes.
- Not all income is exempt. In the four exempt states, wages, interest and investment income are usually still taxed.
- Estate and inheritance taxes vary. Pennsylvania has an inheritance tax, and Illinois taxes estates worth more than $4 million.
- Early withdrawals may be treated differently. Some states tax retirement account withdrawals taken before a certain age.
Before you move, add up the full cost: housing, property tax, sales tax, health care and the cost of living, not just income tax. And because state rules change regularly, it’s worth checking with a tax professional or your new state’s Department of Revenue.
Other ways to cut your tax bill in retirement
Moving isn’t the only option. A few common strategies can help wherever you live:
- Plan the order of your withdrawals. Drawing from regular taxable accounts first can let your 401(k) or IRA keep growing tax-deferred and keep your taxable income lower early in retirement. The right order depends on your situation.
- Think about Roth conversions before RMDs start. Required minimum distributions from traditional IRAs begin at 73 if you were born from 1951 to 1959, or 75 if you were born in 1960 or later. Moving some money into a Roth IRA earlier can shrink those future withdrawals, but you’ll pay tax on the amount you convert in that year.
- Consider delaying Social Security. Waiting until 70 increases your monthly benefit and can give you a few lower-income years to manage taxes.
- Give to charity from your IRA. A qualified charitable distribution can count toward your RMD without adding to your taxable income, if you’re eligible.
There’s also no age at which a pension automatically becomes free of federal tax. Most pension income stays taxable federally for life.
Sources: Investopedia, “Best States If You Want to Avoid Paying State Taxes on Retirement Income”, Kiplinger (updated July 25, 2026) and Money.com on state taxes on Social Security in 2026.
Jackson is a dedicated USA news writer, who covers important topics such as Social Security payment schedules, COLA increases, IRS tax refunds, stimulus payment announcements, Medicare eligibility, retirement benefits, and changes to state driving laws. His goal is to provide clear, informative, and easy-to-follow articles that help retirees, seniors, taxpayers, and American families stay informed.