States that don't tax retirement income let residents keep more of their Social Security, pension and retirement account withdrawals, with 42 states skipping Social Security taxes entirely and nine states charging no income tax at all.
At a Glance
- Forty two states leave Social Security benefits untouched by state tax.
- Thirty seven states don't tax most military retirement pay.
- Sixteen states exempt pension income outright.
- Nine states, including Washington for most residents, have no state income tax at all.
- Some tax free states make up the difference through higher property or sales taxes.
Which States Give Retirees a Break
A handful of states have built their tax codes specifically around easing the load on retirees. Arkansas exempts up to $6,000 a year from pensions and IRA distributions taken after age 59 and a half, or after death or disability, and it skips taxes on Social Security and military retirement pay too. There's no estate or inheritance tax there either, so heirs are spared an extra bill.
Illinois takes a broader approach, exempting pension income, 401(k) and IRA withdrawals, Social Security benefits and military retirement pay from state tax. The catch is that Illinois still taxes other investment earnings, and it does apply estate and inheritance taxes.
Iowa has moved aggressively toward retiree friendly policy in recent years. Since January 2023, residents over 55 haven't owed state tax on pension, annuity or IRA income. Then on January 1, 2025, Iowa shifted to a flat tax rate of 3.8% for everyone and dropped its inheritance tax entirely.
Mississippi exempts retirement plan distributions, pension income, annuities, Social Security and military retirement pay, though early withdrawals generally don't qualify for that treatment. The state also has no estate or inheritance tax.
New Hampshire, Pennsylvania and South Carolina
New Hampshire doesn't tax Social Security or pension income, and since it has no tax on earned wages, most retirement distributions pass through untaxed as well. As of January 1, 2025, the state also repealed its tax on interest and dividends, removing one of the last taxable categories retirees there had to worry about. Estate and inheritance taxes don't exist in New Hampshire either.
Pennsylvania spares Social Security, pension income and retirement plan distributions from state tax, though it does apply a flat income tax rate to other earnings. The state also runs a property tax and rent rebate program aimed at older residents, which can soften the cost of staying put after retirement.
South Carolina doesn't tax Social Security income, and it exempts all military retirement pay from state income tax as well.
The Nine States With No Income Tax
Beyond the retiree specific exemptions above, nine states simply don't levy a state income tax on anyone, which means retirement income of any kind passes through untouched. Those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Washington is a partial exception since it does tax capital gains for high earners, but wages and standard retirement income remain untaxed.
| State | Social Security Taxed | Pension/IRA Taxed | Notable Feature |
|---|---|---|---|
| Arkansas | No | Partial (up to $6,000 exempt) | No estate or inheritance tax |
| Illinois | No | No | Estate and inheritance tax apply |
| Iowa | No | No (age 55+) | Flat 3.8% tax as of 2025 |
| Mississippi | No | No | No estate or inheritance tax |
| New Hampshire | No | No | No tax on wages, interest or dividends |
| Pennsylvania | No | No | Flat tax on other income; property tax rebate for seniors |
| South Carolina | No | Taxed except military | Military retirement pay exempt |
It helps to remember that a state with no income tax isn't necessarily cheaper overall. Many of these nine states lean more heavily on property or sales taxes to fund public services, so the total tax picture for a retiree depends on spending habits and home value, not just income sources.
When Pension Taxes Actually Stop
There's no age at which pension income becomes automatically tax free under federal or most state law. Taxation depends on the type of income and the state you live in, not your birthday. One age that does matter is 73, when retirees must begin taking required minimum distributions from tax deferred accounts such as traditional IRAs and 401(k)s.
Ways to Trim the Tax Bill in Retirement
Sequencing withdrawals matters. Drawing from taxable accounts first, then tax deferred accounts like IRAs and 401(k)s, lets tax advantaged money keep growing while limiting taxable income in the early retirement years. Because RMDs kick in at 73, some retirees convert portions of a traditional IRA to a Roth IRA ahead of time, since Roth accounts aren't subject to RMDs and future withdrawals come out tax free. Delaying Social Security until age 70 raises the eventual benefit while keeping taxable income lower in the meantime. Charitable donations and certain medical deductions can also chip away at a tax bill, and choosing to live in a tax friendly state remains one of the more direct levers retirees control.
How Much of Social Security Actually Gets Taxed
Whether Social Security is taxed at the federal level depends on combined income, which adds Social Security benefits, nontaxable interest and other income together. For single filers with combined income between $25,000 and $34,000, up to 50% of benefits may be taxed; for married couples filing jointly, that range is $32,000 to $44,000. Once a single filer's combined income tops $34,000, or a married couple's tops $44,000, up to 85% of benefits can become taxable.