12 States That Won't Tax Your Retirement Income
Retirees can save a lot of money in these states that completely exempt the most common types of retirement income – 401(k)s, IRAs and pensions – from taxation.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

You've worked hard all your life, and now you're retired (or will retire soon). Unfortunately, there's a pretty good chance that Uncle Sam is going to take a cut of your 401(k), traditional IRA or pension income. But what about your state? Will it take a bite out of your retirement income, too?
Most states tax at least a portion of retirement income (including some states that tax Social Security benefits). Your state might offer some tax breaks, but those breaks usually have limitations based on your age and/or income. A few states, however, completely exempt the most common types of retirement income — 401(k)s, IRAs and pensions — from taxation. That's a huge plus for retirees living in those states.
Here are 12 states where you don't have to pay tax on any of your 401(k), IRA or pension income (listed alphabetically). If you live — or plan to live — in one of these states, you can stretch your retirement savings quite a bit further.

Alaska
Retirement Income: Alaska usually isn't the first place that comes to mind when you think about places to retire. But if you live there, none of your 401(k), IRA or pension income will be taxed. That's because the Last Frontier doesn't have an income tax. Yeah, it can be cold, but senior citizens in the state can warm up to the Alaska tax code.
Social Security Benefits: Like most states, Alaska does not tax Social Security benefits.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: Alaska doesn't have an inheritance tax or an estate tax.
For more information, see the Alaska State Tax Guide (opens in new tab).

Florida
Retirement Income: Sunshine, palm trees, sandy beaches … what more could you want in a retirement destination? How about no taxes on your 401(k), IRA or pension income? That's what you get if you can establish residency in Florida, because the Sunshine State doesn't have an income tax.
Social Security Benefits: Florida doesn't tax Social Security benefits, either.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: There are no inheritance or estate taxes in Florida.
For more information, see the Florida State Tax Guide (opens in new tab).

Illinois
Retirement Income: Overall, Illinois is one of the least tax-friendly states for retirees. However, it's the only Midwestern state that completely exempts 401(k), IRA and pension income from tax. Pension and 401(k) income must be from a qualified employee benefit plan to be tax-free, though.
Social Security Benefits: The Prairie State doesn't tax Social Security benefits, either.
Income Tax Range: The Illinois income tax rate is a relatively low, flat 4.95%.
Inheritance and Estate Taxes: Illinois has an estate tax for estates worth more than $4 million.
For more information, see the Illinois State Tax Guide (opens in new tab).

Mississippi
Retirement Income: If you're at least 59½ years old, the Magnolia State won't tax your retirement income. However, the state will take its share of 401(k), IRA or pension income received by those who retire early.
Social Security Benefits: Mississippi won't tax your Social Security benefits.
Income Tax Range: For the 2022 tax year, Mississippi's lowest tax rate is 4% (on taxable income from $5,001 to $10,000), and its top rate is 5% (on taxable income of more than $10,000).
Starting in 2023, there's no tax on the first $10,000 of taxable income (just the 5% tax on income over $10,000). Plus, the tax rate on income above $10,000 is reduced to 4.7% for 2024, 4.4% for 2025, and 4% for 2026 and thereafter.
Inheritance and Estate Taxes: Don't worry about inheritance or estate taxes if you live in Mississippi. The state doesn't impose those taxes.
For more information, see the Mississippi State Tax Guide (opens in new tab).

Nevada
Retirement Income: Why gamble with your finances in your golden years? Move to Nevada, where the state won't tax your 401(k), IRA or pension income—or any of your other income, for that matter, because it doesn't have an income tax.
Social Security Benefits: Social Security recipients hit the jackpot in Nevada. That's because Social Security benefits are tax-free in Nevada.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: Nope — those taxes don't exist in Nevada.
For more information, see the Nevada State Tax Guide (opens in new tab).

New Hampshire
Retirement Income: If you want to live in New England during your golden years, try New Hampshire. It's the only state in the region without a general income tax. Instead, the state imposes a tax on interest and dividends (although this tax is being phased-out and will be repealed in 2027). With no broad income tax, you can completely avoid state tax on payments from your 401(k) plan, IRA or pension if you retire to New Hampshire.
Social Security Benefits: New Hampshire doesn't tax your Social Security benefits, either.
Income Tax Range: For 2022, there's a flat 5% tax on interest and dividends only. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, 1% for 2026, and 0% after 2026.
Inheritance and Estate Taxes: New Hampshire doesn't collect inheritance or estate taxes.
For more information, see the New Hampshire State Tax Guide (opens in new tab).

Pennsylvania
Retirement Income: As Ben Franklin once said, "a penny saved is a penny earned." Retirees can save a lot of pennies in Pennsylvania, because the Keystone State doesn't tax pension income from an eligible employer-sponsored retirement plan (except if you retire early). Payments from a 401(k) plan or IRA after retiring also avoid state taxation (again, except in early retirement).
Social Security Benefits: Social Security benefits aren't taxed by Pennsylvania.
Income Tax Range: Pennsylvania has a low, flat income tax rate of 3.07%. However, municipalities and school districts can tax your income, too.
Inheritance and Estate Taxes: Pennsylvania does have an inheritance tax that ranges from 4.5% to 15%, depending on a recipient's relationship to the deceased and their age.
For more information, see the Pennsylvania State Tax Guide (opens in new tab).

South Dakota
Retirement Income: If you like wide-open spaces, South Dakota might be the place for you. With no income tax and no tax on 401(k), IRA or pension income, it's also a great place to stretch your retirement savings.
Social Security Benefits: There's also no South Dakota tax on Social Security benefits.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: Like most states, South Dakota doesn't impose an inheritance or estate tax.
For more information, see the South Dakota State Tax Guide (opens in new tab).

Tennessee
Retirement Income: Although the state's nickname is the Volunteer State, no one in Tennessee is volunteering to pay income taxes. But that's fine, since Tennessee doesn't have an income tax, which means retirees in the state don't pay tax on their 401(k), IRA or pension income.
Social Security Benefits: Tennessee retirees also collect Social Security benefits without paying state tax on them.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: Tennessee doesn't have an inheritance or estate tax.
For more information, see the Tennessee State Tax Guide (opens in new tab).

Texas
Retirement Income: Don't mess with Texas … and Texas won't mess with your retirement income. Because the Lone Star State doesn't have a personal income tax, it will keep its hands off your 401(k), IRA and pension income, too.
Social Security Benefits: Of course, because there's no income tax, there's no tax on your Social Security benefits in Texas, either. So, feel free to spend some of that money on a ten-gallon hot or a set of spurs instead of state taxes.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: There are no inheritance or estate taxes in Texas.
For more information, see the Texas State Tax Guide (opens in new tab).

Washington
Retirement Income: If you like a good cup of coffee, consider retiring in Washington State. If you're not sold on the coffee, maybe you'll think again when you learn that the Evergreen State doesn't have an income tax. That means none of your 401(k), IRA or pension income is going to take a state tax hit.
Social Security Benefits: Social Security benefits escape taxes in Washington, too.
Income Tax Range: Not applicable (no income tax). [Note that, beginning in 2022, Washington will impose a 7% tax on the sale or exchange of certain long-term capital assets if the profits exceed $250,000 annually. However, the constitutionality of this capital gains tax is being challenged in the courts. A lower court has ruled the tax is unconstitutional, but the Washington Supreme Court has put the lower-court ruling on hold until it can address the matter.]
Inheritance and Estate Taxes: Well, no state is perfect. For 2023, Washington taxes estates with a value of at least $2.193 million (the exemption threshold is subject to adjustment each year for inflation). The state doesn't have an inheritance tax, though.
For more information, see the Washington State Tax Guide (opens in new tab).

Wyoming
Retirement Income: Wyoming is very taxpayer-friendly when it comes your retirement income—no taxes on payments from 401(k) plans, IRAs or pensions. Why? The Cowboy State doesn't have an income tax.
Social Security Benefits: Wyoming won't take a share of your Social Security check, either.
Income Tax Range: Not applicable (no income tax).
Inheritance and Estate Taxes: Don't worry about them. Wyoming doesn't impose an inheritance or estate tax.
For more information, see the Wyoming State Tax Guide (opens in new tab).
Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
-
-
Considering a 1031 Exchange? The Rules You Need to Know
Taxes are an inevitable part of investing in real estate. You can, however, defer or avoid paying capital gains taxes by following some simple rules of a 1031 exchange. Yes, you read that correctly!
By Daniel Goodwin • Published
-
Stock Market Today: Stocks End the Week on a High Note
Intel stock plunged after a big earnings miss, but encouraging inflation and consumer sentiment data created tailwinds for the broad market.
By Karee Venema • Published
-
Can the Earned Income Tax Credit Help You?
The IRS and community partners want to improve earned income tax credit awareness.
By Kelley R. Taylor • Published
-
The 6 Safest Vanguard Funds to Own in a Bear Market
recession Batten the hatches for continued market tumult without eating high fees with these six Vanguard ETFs and mutual funds.
By Kyle Woodley • Published
-
Child Tax Credit Changes and FAQs for Your 2022 Tax Return
Tax Breaks The bigger and better child tax credit that applied for 2021 is gone, replaced by a new set of rules for taking the credit on 2022 returns.
By Joy Taylor • Published
-
The IRS Issued 12 Million Tax Refunds for 2020: Here's Why
An unemployment tax break caused the IRS to issue $14.8 billion in tax refunds.
By Kelley R. Taylor • Published
-
New EV Tax Credit Gets Complicated for 2023
More car models qualify for the full federal electric vehicle tax credit for a little while, but then what?
By Kelley R. Taylor • Published
-
State "Stimulus Checks" in 2023 – Which States Are Still Sending Payments
Residents in a handful of states could still receive a tax rebate check or other payment in 2023.
By Rocky Mengle • Last updated
-
What's the Gift Tax Exclusion for 2023?
Plan on giving cash or property to family or friends? Keeping it below the annual gift tax exemption can help you save both time and money.
By Rocky Mengle • Published
-
Retirement Saver's Tax Credit Converted to "Saver's Match"
President Biden has signed legislation that turns the Saver's Credit into a government match to your retirement plan contributions.
By Rocky Mengle • Published