State Income Taxes on Retirement Income: 2026 Guide

Where you live in retirement can matter almost as much as how you invest. A retiree with $80,000 in annual withdrawals could pay $0 in state income tax — or $4,000 to $6,000 — depending solely on their state of residence. This guide breaks down which states tax Social Security, pensions, and IRA/401(k) distributions, with 2026 exemption thresholds, so you can make an informed decision.

Quick overview: four categories

Category	What's taxed	States
No income tax at all	Nothing	AK, FL, NV, NH, SD, TN, TX, WA, WY
Exempt most retirement income	Minimal or nothing	IL, IA, MS, PA, MI (2026)
Tax SS income (8 states)	Social Security (with exemptions)	CO, CT, MN, MT, NM, RI, UT, VT
Tax most retirement income	SS (often exempt) + pensions + IRA/401(k)	All remaining states — but with varying exemptions

The Social Security default: 38 states do not tax Social Security benefits at all in 2026. Even in states with broad income taxes, most retirees never owe state tax on their Social Security — only the 8 states listed below impose any Social Security tax, and most of them exempt lower-income retirees entirely.

The 9 states with no income tax

These states impose no individual income tax, so all retirement income — Social Security, pensions, IRA and 401(k) distributions, interest, dividends — is completely free of state income tax:

Alaska — no income tax, no sales tax. Property taxes vary by municipality but are relatively modest.
Florida — no income tax. High property values in coastal areas mean property taxes can be significant; the homestead exemption helps primary residents. No estate tax.
Nevada — no income tax. Sales tax 6.85% base + local.
New Hampshire — eliminated its investment income tax in 2025; as of 2026, fully zero income tax on all forms of income including dividends and interest.¹
South Dakota — no income tax, low property taxes in most areas.
Tennessee — eliminated its Hall Tax on investment income in 2022; no income tax on any income since 2022.
Texas — no income tax. Property taxes are high — often 1.5–2.5% of home value — which offsets some of the income tax advantage. No estate tax.
Washington — no income tax, though a 7% capital gains tax applies to gains above $262,000 (2026). This affects high-asset retirees with large stock sales but not Social Security, pensions, or IRA distributions.
Wyoming — no income tax, low property taxes, no estate tax. Often cited as one of the most retiree-friendly states overall.

The catch: States with no income tax often compensate through higher property taxes (Texas), higher sales taxes (Nevada, Tennessee), or higher costs of living (Florida coastal areas). Total tax burden matters more than any single tax.

States that fully exempt most retirement income

These states have income taxes, but they exclude most or all retirement income from the tax base — effectively matching the no-income-tax states for most retirees:

Illinois — no state income tax on Social Security, pensions, or IRA/401(k) distributions. Illinois taxes wages and investment income at a flat 4.95%, so working retirees or those with taxable brokerage income still owe tax on those amounts. Illinois has notably high property taxes.
Iowa — all retirement income is exempt from state income tax for taxpayers age 55 and older. This includes Social Security, pensions, and IRA/401(k) distributions.² Iowa's income tax rate is 3.8% in 2026 for income not otherwise exempt.
Mississippi — retirement income received after age 59½ is fully exempt from Mississippi income tax, including pensions, 401(k) distributions, and IRA withdrawals.² Social Security is also exempt. Low cost of living.
Pennsylvania — distributions from qualified retirement plans (401(k), IRAs, pensions) are exempt from Pennsylvania personal income tax after age 59½.² Social Security is exempt. PA imposes a flat 3.07% rate on wages, so part-time working retirees still owe tax on earned income.
Michigan (2026) — starting with the 2026 tax year, Michigan's Public Act 4 of 2023 fully phases in, allowing retirees to deduct up to $67,610 (single) / $135,220 (joint) in pension and retirement income from state income taxes.³ Michigan's flat income tax rate is 4.25%, so retirees with income below those thresholds effectively pay little or nothing. Social Security is also exempt in Michigan.

The 8 states that tax Social Security in 2026

Only 8 states tax Social Security benefits in 2026 — and most offer substantial exemptions that protect lower- and middle-income retirees. If your combined income (adjusted gross income + non-taxable interest + 50% of SS benefits) puts you in the exemption range, you may owe nothing even in these states.

State	Who is exempt	For those who aren't exempt
Colorado	Age 65+: can deduct all federally-taxed SS. Age 55–64: exempt if AGI ≤ $75,000 (single) / $95,000 (joint).	Benefits taxed at Colorado's flat 4.4% rate above the exemption.
Connecticut	Fully exempt if AGI < $75,000 (single) / $100,000 (joint). 75% exempt above those limits.	25% of benefits taxed at CT's 2–6.99% marginal rate for higher-income filers.
Minnesota	Fully exempt if AGI ≤ $84,490 (single) / $108,320 (joint).¹ Partial exemption above those levels.	Benefits taxed at MN's 5.35–9.85% rates. High earners can pay significant SS tax.
Montana	SS included in income at the same rate as the federal government.	Taxed if single AGI > $25,000 / joint > $32,000. Same provisional income test as federal. Montana's top rate is 5.9%.
New Mexico	Fully exempt if AGI < $100,000 (single) / $150,000 (joint).¹	Benefits taxed above those thresholds. NM top rate is 5.9%. Most retirees fall under the exemption.
Rhode Island	Exempt if you have reached your full retirement age (FRA) AND AGI is below $104,200 (single) / $133,250 (joint).⁴	Benefits taxed at RI's 3.75–5.99% rates for those above income thresholds or below FRA.
Utah	Utah taxes SS at its flat 4.5% rate, but provides a Social Security Benefits Credit for lower-income retirees. Credit phases out above ~$54,000 (single).⁴	Higher-income retirees pay 4.5% on the same portion that's taxable at the federal level.
Vermont	Fully exempt if AGI ≤ $55,000 (single) / $70,000 (joint). Partial exemption to $65,000 / $80,000.¹	Full SS income taxed at VT's 3.35–8.75% rates above the partial-exemption range.

Note on West Virginia: West Virginia fully phased out its Social Security income tax in 2026, joining the 42 states that do not tax SS benefits.

Pension and IRA/401(k) treatment in other states

Most of the remaining states tax pension and IRA/401(k) distributions as ordinary income, but many offer partial exemptions — particularly for government pensions and for retirees above certain ages. A few notable examples:

New York — government (federal, NY state, and local) pension income is fully exempt. Private pension and IRA income: $20,000 exemption per year for taxpayers age 59½ and older. NY does not tax Social Security.
Georgia — substantial retirement income exclusion: up to $65,000 per person (age 65+) for pension, IRA, 401(k), and Social Security income combined. A couple can shelter $130,000/year from Georgia income tax.
South Carolina — pension exclusion of up to $15,000 for those under 65; up to $30,000 for those 65+. Social Security is exempt. Warm climate and relatively low cost of living make SC a popular retirement destination.
Alabama — Social Security is exempt. Most pension income from qualified plans is exempt. IRAs and 401(k) distributions are taxable. Top rate 5%.
Arizona — Social Security is exempt. Growing retirement income exemptions phasing in through 2025–2026 period. Top rate 2.5% (one of the lower flat rates in states that have an income tax).

The hidden trap: Even in a state that exempts Social Security, large IRA withdrawals or Roth conversions can push your income into a taxable range — triggering state income tax on money that wasn't subject to it before. This is why Roth conversion planning and withdrawal ordering need to be done with your full state tax picture in mind.

The complete tax picture: beyond income tax

State income taxes are the headline number, but retirees should evaluate the complete tax burden before deciding where to live:

Property tax. Texas and Illinois have no income tax on retirement income — but property taxes in many areas run 1.5–2.5% of assessed value. A $500,000 home could cost $10,000–$12,500/year. Versus a state with 4% income tax but 0.5% property tax on the same home: $2,500/year. The math can flip entirely.
Sales tax. Tennessee (9.55% combined average) and Nevada (8.3%) have no income tax but high sales taxes. For retirees spending $60,000/year in consumption, a 9% vs 4% sales tax difference is $3,000/year.
Estate and inheritance tax. 12 states plus DC impose estate taxes; 6 states have inheritance taxes. Oregon's estate tax kicks in at $1M (far below the federal $15M OBBBA threshold). Iowa is phasing out its inheritance tax. Moving from Oregon or Massachusetts to Florida can save meaningful estate taxes on a $2–3M estate.
Cost of living. Wyoming, Mississippi, and South Dakota offer both tax advantages and below-average costs of living. Florida, particularly coastal areas, has no income tax but above-average property values, homeowner's insurance, and general living costs.
Healthcare access. Rural states with favorable tax structures may have fewer medical specialists — a practical consideration as you age. Proximity to a major medical center becomes more valuable in your 70s and 80s.

When to think about a state tax move — and when not to

Moving states for tax purposes can be worthwhile, but the economics depend heavily on your income profile:

Move can make financial sense when:

You have $150,000+ in annual retirement income (IRA, pension, 401(k)) and live in a high-income-tax state like California (13.3% top rate) or Minnesota (9.85%)
You have a large estate and live in a state with an estate tax at a low threshold
You're already open to relocating for lifestyle reasons — weather, family, cost of living — and the tax savings tip the math

Move rarely makes sense when:

Your retirement income is mostly Social Security (38 states exempt it entirely; even in the 8 that tax it, you may fall under the exemption threshold)
You have deep ties to a high-tax state — family, medical care, housing — that make the transition costs and quality-of-life trade-offs not worth the savings
You're moving primarily from a state where your income is mostly exempt already (e.g., your pension is exempt and SS is exempt — the marginal gain from moving may be small)

A fee-only retirement advisor can model your specific income streams against your current state's rules and a target state's rules — including the one-time tax consequences of any large Roth conversions or asset liquidations you're considering before the move. The RMD trajectory matters here too: if your traditional IRA will generate $80,000/year in required distributions starting at 73, that changes the calculation versus someone whose income is mostly pension and Social Security.

See also: tax-efficient withdrawal ordering and IRMAA planning — both are affected by state of residence (IRMAA is federal-only, but state Medicaid rules are not).

Kiplinger — The 8 States That Tax Social Security in 2026 (Minnesota, Connecticut, Vermont, Colorado thresholds)
AARP — 13 States That Won't Tax Your Retirement Distributions (Illinois, Iowa, Mississippi, Pennsylvania rules)
Michigan.gov — Michigan Retirement and Pension Benefits (Public Act 4 of 2023) — 2026 deduction limits $67,610/$135,220
CountryTaxCalc — Social Security Tax by State 2026 (Rhode Island FRA threshold $104,200/$133,250; Utah credit phase-out)
Kiplinger — How All 50 States Tax Retirees (2026)

Values verified as of May 2026 using IRS guidance, state tax authority sources, and Kiplinger/AARP research. State tax laws can change — confirm with a tax professional or your state's revenue department before making major financial decisions.