Which States Tax Retirement Income? A State-by-State Comparison

Which States Have No Income Tax?

Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire (interest/dividends only until 2027), South Dakota, Tennessee, Texas, Washington, and Wyoming.

For a retiree with $100,000 in total income, moving from a high-tax state (California at ~9%, New York at ~7%) to a no-tax state saves $7,000-$9,000/year. Over a 25-year retirement: $175,000-$225,000.

But total cost matters: Florida has no income tax but has higher property taxes and homeowners insurance than some income-tax states. The analysis looks at total tax burden, not just income tax.

How Do States Treat Social Security and Retirement Income?

Social Security: Most states exempt SS from state tax. Notable exceptions that tax SS (partially or fully): Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, West Virginia.

Pension/401(k)/IRA income: Treatment varies widely. - Fully exempt: Illinois, Mississippi, Pennsylvania - Partially exempt: Many states exempt a portion (e.g., first $30,000-$80,000) - Fully taxed: California, New York, Oregon, and others tax all retirement income

Military retirement: Many states have recently moved to fully exempt military pensions.

The analysis engine applies your specific state's tax rules to your retirement income mix — Social Security, pension, 401(k)/IRA, Roth, and taxable investment income.

Want to Compare Your State's Tax Impact?

The analysis at myaifinancialplan.com uses your state's specific tax treatment for every income source — showing the total state tax impact on your retirement plan. Start free at myaifinancialplan.com.