States That Don't Tax Pension Income
A pension can be fully exempt, partly excluded, or fully taxed depending on the state, your age, income, and plan type. This guide separates the clean answers from the fine print.
A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners
Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Drafted August 10, 2026.
The Short Answer for 2026
The cleanest group is the nine states with no broad individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. They do not need a pension exclusion because they do not impose a broad tax on individual income. Illinois, Mississippi, and Pennsylvania broadly exempt qualifying pension income. Iowa exempts qualifying retirement income beginning at age 55. Alabama and Hawaii can exempt many pensions, but the result depends on the plan's structure and funding source.
The word “pension” is not enough.
A defined-benefit pension, 401(k), IRA, military pension, civil-service pension, and annuity can receive different treatment on the same state return. Identify the payment before applying a list.
The Nine States With No Broad Individual Income Tax
These states are the simplest income-tax answer, but they are not automatically the lowest-cost retirement answer. A move can trade state income tax for higher housing, insurance, property tax, or sales tax. Model the full household budget and the old state's domicile rules before changing residency.
States With Broad or Plan-Specific Pension Exemptions
Broad qualifying-pension exemptions
Age- or plan-specific exemptions
“Exempt” still means the payment must fit the state's definition. Pennsylvania, for example, distinguishes eligible retirement distributions from some early distributions. Alabama and Hawaii turn heavily on whether the benefit is a qualifying defined-benefit pension or another retirement-account distribution. The official source and the Form 1099-R details matter more than a generic retirement label.
Partial Exemptions: Where the Planning Actually Lives
Most income-tax states are not a simple yes or no. They may subtract a capped dollar amount, exempt only government pensions, phase relief out as household income rises, or combine pensions and retirement-account withdrawals under one limit. A large Roth conversion, capital gain, or spouse's wages can change the pension result even when the pension itself stays the same.
| Question | Why it changes the answer | Document to check |
|---|---|---|
| What type of plan paid it? | Government, private defined-benefit, military, and account distributions can differ | Form 1099-R and plan statement |
| How old is the recipient? | Some exclusions begin at a specified age | State return instructions |
| What is household income? | Income-tested deductions and credits can phase down or disappear | Full-year household projection |
| Is the payment an early distribution? | Some states reserve relief for retirement-age or plan-qualified payments | Distribution code and state definition |
| Does one cap cover several streams? | A pension can consume exclusion room otherwise available to an IRA or 401(k) | State subtraction worksheet |
36 jurisdictions in the current table classify pension income as taxed or partially taxed. That count is a screening signal, not a filing position; each row below links to its official state source.
Pension Tax Treatment in All 50 States and DC
Use this as a comparison screen. Open the official source for any state you are seriously considering, then confirm the current return and instructions for the year of the payment.
| State | Pension income | 401(k) / IRA income | Key limitation or feature | Source |
|---|---|---|---|---|
| Alabama | Often exempt | Partially taxed | $6,000 account exclusion at age 65+ | Official source |
| Alaska | No income tax | No income tax | No individual income tax | Official source |
| Arizona | Partially taxed | Taxed | Up to $2,500 for qualifying government pensions | Official source |
| Arkansas | Partially taxed | Partially taxed | Up to $6,000 of eligible retirement income | Official source |
| California | Taxed | Taxed | $20,000 military-pay exclusion with income limits | Official source |
| Colorado | Partially taxed | Partially taxed | Retirement subtraction up to $20,000 or $24,000 | Official source |
| Connecticut | Partially taxed | Partially taxed | Income-based Social Security and pension phaseouts | Official source |
| Delaware | Partially taxed | Partially taxed | Up to $12,500 pension exclusion at age 60+ | Official source |
| Florida | No income tax | No income tax | No individual income tax | Official source |
| Georgia | Partially taxed | Partially taxed | Retirement exclusion up to $35,000 or $65,000 | Official source |
| Hawaii | Often exempt | Taxed | Employer-funded pension portions may be exempt | Official source |
| Idaho | Partially taxed | Taxed | Deduction for certain public pensions | Official source |
| Illinois | Exempt | Exempt | Qualified retirement income is subtracted | Official source |
| Indiana | Taxed | Taxed | Federal civil-service deduction may apply | Official source |
| Iowa | Exempt at 55+ | Exempt at 55+ | Qualifying retirement income exclusion at age 55+ | Official source |
| Kansas | Partially taxed | Taxed | Kansas public pensions are generally exempt | Official source |
| Kentucky | Partially taxed | Partially taxed | Retirement-income exclusion up to $31,110 | Official source |
| Louisiana | Partially taxed | Partially taxed | Age-65 exclusion starts at $12,000 per eligible person and is indexed annually | Official source |
| Maine | Partially taxed | Taxed | Pension-income deduction tied to Social Security benefit | Official source |
| Maryland | Partially taxed | Partially taxed | Pension exclusion for qualifying residents age 65+ | Official source |
| Massachusetts | Partially taxed | Taxed | Many government pensions are exempt | Official source |
| Michigan | Partially taxed | Partially taxed | 2026 subtraction up to $67,610 single or $135,220 joint | Official source |
| Minnesota | Taxed | Taxed | Income-based Social Security subtraction | Official source |
| Mississippi | Exempt | Exempt | Qualified retirement income is exempt | Official source |
| Missouri | Partially taxed | Partially taxed | Public-pension deduction and phased $6,000 private exemption | Official source |
| Montana | Partially taxed | Partially taxed | Up to $5,500 qualified retirement subtraction | Official source |
| Nebraska | Taxed | Taxed | Military retirement pay is exempt | Official source |
| Nevada | No income tax | No income tax | No individual income tax | Official source |
| New Hampshire | No income tax | No income tax | Interest and dividends tax ended in 2025 | Official source |
| New Jersey | Partially taxed | Partially taxed | Large age-62 exclusion subject to income limits | Official source |
| New Mexico | Partially taxed | Partially taxed | $8,000 age-65 deduction; $30,000 military exclusion | Official source |
| New York | Partially taxed | Partially taxed | $20,000 exclusion at 59.5+; government pensions exempt | Official source |
| North Carolina | Taxed | Taxed | Bailey relief and service-conditioned military deduction | Official source |
| North Dakota | Taxed | Taxed | Large zero-rate bracket; military pay exempt | Official source |
| Ohio | Taxed | Taxed | Retirement-income and senior credits may apply | Official source |
| Oklahoma | Partially taxed | Partially taxed | Up to $10,000 retirement-income exclusion | Official source |
| Oregon | Taxed | Taxed | Limited retirement-income credit may apply | Official source |
| Pennsylvania | Exempt | Exempt | Eligible retirement distributions are exempt | Official source |
| Rhode Island | Partially taxed | Partially taxed | Income-tested retirement exclusion | Official source |
| South Carolina | Partially taxed | Partially taxed | Retirement deduction plus age-65 deduction rules | Official source |
| South Dakota | No income tax | No income tax | No individual income tax | Official source |
| Tennessee | No income tax | No income tax | No individual income tax | Official source |
| Texas | No income tax | No income tax | No individual income tax | Official source |
| Utah | Taxed | Taxed | Income-tested retirement and Social Security credits | Official source |
| Vermont | Partially taxed | Taxed | Income-tested Social Security and pension exemptions | Official source |
| Virginia | Partially taxed | Partially taxed | Age deduction and $40,000 military subtraction | Official source |
| Washington | No income tax | No income tax | No broad individual income tax | Official source |
| West Virginia | Partially taxed | Taxed | Social Security fully exempt beginning in 2026 | Official source |
| Wisconsin | Partially taxed | Partially taxed | Up to $24,000 at age 67+; claiming it bars state credits | Official source |
| Wyoming | No income tax | No income tax | No individual income tax | Official source |
| Washington DC | Taxed | Taxed | Most retirement income is taxable | Official source |
Verified against the linked sources on August 4, 2026. Confirm again before filing or changing domicile.
How to Compare States Before You Move
Start with your actual income, not an average retiree. List each pension, Social Security, IRA and 401(k) withdrawal, Roth conversion, wage, rental, dividend, interest, and gain. Then compare the same year in each candidate state.
| Step | What to model | Why it matters |
|---|---|---|
| 1. Inventory income | Each payment by payer and tax character | State rules attach to the stream, not the word retirement |
| 2. Add timing | Pension start, required distributions, conversions, sales, and move date | A partial-year return can differ from the steady-state year |
| 3. Apply state limits | Age, income, filing status, plan type, and coordinated exclusions | These conditions decide how much of the headline exemption survives |
| 4. Add other taxes and costs | Property, sales, estate or inheritance tax, insurance, and housing | Income tax is only one line of retirement cash flow |
| 5. Prove domicile | Housing, licenses, voting, vehicles, banking, and time in each state | A move works only when the residency facts support it |
State Pension Tax FAQs
Comparing retirement states or planning a large pension year?
We model pensions, account withdrawals, conversions, residency timing, and the rest of the household tax picture before a move locks in the result.
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