States That Don't Tax Pension Income in 2025

Over a dozen states don't tax pension income regardless of your age or how much money you have.

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Pensions aren't as common as they used to be. Over the past few decades, there’s been a significant shift away from traditional pension plans, particularly in the private sector.

According to the latest government data, about 15% of private sector workers had access to defined benefit plans. (Most employees now rely on 401(k)s and other similar retirement savings options.)

However, for those who have them (around 30% of older adults in the U.S. reportedly rely on pension income). Pensions are a benefit plan sponsored by an employer or a union, and can provide a steady and reliable source of funds for your retirement. Pension plans can help cover everyday expenses and enhance financial security, and are eligible for certain tax benefits.

That being said, some states are more tax-friendly than others when it comes to your pension. Here’s what you need to know to make the most out of your retirement savings.

Is my pension taxable?

When it comes to taxes, pensions can be a bit tricky. Generally speaking, pension income is taxable at the federal level, so you have to account for that when planning your retirement budget. For more information, see How the IRS Taxes Retirement Income.

However, as Kiplinger reports, taxes in retirement vary from state to state. For instance, some states tax pension income fully, while others offer partial or complete exemptions.

For a state-by-state breakdown, see Kiplinger's guide: Retirement Taxes: How All 50 States Tax Retirees.

As you consider where you’d like to retirement, you should know how your pension and other retirement income will be taxed in your state of choice. That way, you can avoid unwelcome surprises when it's time to file your tax return.

Some states don’t tax Social Security

All this talk of pensions may have you wondering about states that tax Social Security.

As of 2025, nine states tax Social Security benefits to varying degrees. Similar to pensions, the rules differ among the states based on factors like age and income. For example, some states offer tax benefits for individuals under a certain age, while others provide exemptions based on adjusted gross income (AGI).

Meanwhile, many states either don't tax Social Security income or offer specific exemptions. And recently, two states eliminated taxes on Social Security benefits.

It should be noted that the Trump administration has floated eliminating taxes on Social Security benefits, a pledge some experts argue may do more harm than good. The measure may be included in Trump’s comprehensive legislative tax package dubbed ‘one, big beautiful bill,’ which also calls for a permanent extension of the Tax Cuts and Jobs Act (TCJA) and other policies such as no taxes on tips and overtime pay.

Currently, some 67 million U.S. households receive monthly benefit checks from the retirement. For more information on states and Social Security taxes, see Kiplinger's report States That Tax Social Security Benefits in 2025.

15 states that don’t tax your pension income 

Some states don’t tax your retirement income at all, but others may have certain exemptions on private or government pensions. Here’s our list of the 15 states that will give you a tax break on your retirement income. (States are listed alphabetically.)

 Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation. 

Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life. 

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