State Tax on Retirement Income 2026 — By State Breakdown
Where you retire can save or cost you thousands in state taxes every year. Nine states have no income tax at all, and many others exempt some or all retirement income — Social Security, pensions, and 401(k)/IRA withdrawals. A few states tax nearly everything. For retirees considering a move, the tax difference can be $3,000–$10,000+ per year.
See your state tax on any income with the State Income Tax Calculator.
Social Security: State Taxation (2026)
Most states don't tax Social Security benefits. Only a handful do:
| State | Taxes Social Security? | Exemptions |
|---|---|---|
| Colorado | Yes | Can exclude up to $20,000 (age 55–64) or $24,000 (65+) |
| Connecticut | Yes | Exempt if AGI below $75,000 (single) / $100,000 (MFJ) |
| Minnesota | Yes | Partial subtraction based on income |
| Montana | Yes | Partial exclusion |
| New Mexico | Yes | Exempt if income below $100,000 (MFJ) |
| Rhode Island | Yes | Exempt if AGI below $107,950 (MFJ) |
| Utah | Yes | Credit offsets tax for lower incomes |
| Vermont | Yes | Exempt if AGI below $65,000 (single) / $75,000 (MFJ) |
| West Virginia | Yes | Phasing out by 2026 |
The other 41 states + DC do NOT tax Social Security benefits. The nine no-income-tax states automatically exempt everything.
401(k) and IRA Distributions: State Treatment
| Treatment | States |
|---|---|
| No income tax at all | AK, FL, NV, NH, SD, TN, TX, WA, WY |
| Exempt all retirement income | IL, MS, PA (distributions from qualified plans) |
| Generous exemptions | AL ($25K+), GA ($65K at 65+), HI ($43K+), IA (exempt at 55+) |
| Partial exemptions | Many states offer $5K–$20K deductions for pension/retirement income |
| Fully taxed | CA, CT, MN, NE, VT, and others tax most retirement income |
State Tax on $60,000 Retirement Income
| State | Approximate State Tax | Effective Rate |
|---|---|---|
| Florida (no income tax) | $0 | 0% |
| Pennsylvania (exempt) | $0 | 0% |
| Illinois (exempt) | $0 | 0% |
| Mississippi (exempt) | $0 | 0% |
| Georgia (65+ exemption) | $0–$500 | 0–0.8% |
| North Carolina (4.5% flat) | $2,160 | 3.6% |
| New York (taxed, $20K exclusion) | $1,600 | 2.7% |
| California (fully taxed) | $2,200 | 3.7% |
| Oregon (fully taxed) | $4,100 | 6.8% |
| Minnesota (fully taxed) | $3,500 | 5.8% |
The difference between retiring in Florida vs Minnesota on the same $60,000 income: $3,500/year in state taxes — or $35,000 over a 10-year period.
Military Retirement Pay
Military retirement pay receives special treatment in many states:
| Treatment | States |
|---|---|
| No income tax (all income exempt) | AK, FL, NV, NH, SD, TN, TX, WA, WY |
| Military retirement fully exempt | AL, AR, CT, HI, IA, IL, KS, KY, LA, MA, MI, MN, MS, MO, NJ, NY, NC, OH, OK, PA, WI |
| Partially exempt | AZ, CO, GA, ID, IN, ME, MD, NE, SC, VA |
| Fully taxed | CA, MT, NM, OR, RI, UT, VT |
The trend is toward exemption: several states have added full military retirement exclusions in recent years.
Best States for Retirees (Tax Perspective)
| Rank | State | SS Taxed? | Pension/401k Taxed? | Property Tax | Sales Tax |
|---|---|---|---|---|---|
| 1 | Wyoming | No | No income tax | 0.61% | 5.36% |
| 2 | Florida | No | No income tax | 0.89% | 7.01% |
| 3 | Nevada | No | No income tax | 0.60% | 8.23% |
| 4 | Pennsylvania | No | Exempt (qualified plans) | 1.58% | 6.0% |
| 5 | Mississippi | No | Exempt | 0.81% | 7.0% |
For the full list of state rates, see State Income Tax Rates 2026. For understanding moving implications, read State Tax After Moving. And for the no-tax state full breakdown, check States With No Income Tax.
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