15 States That Won’t Tax Retirement Income

You’ve worked hard for your money, and now it’s time to enjoy it. But depending on where you live, you may end up paying more in taxes.

Most retirement plans are taxable, that is, unless you live in one of the following states that don’t have an income tax or have exceptions for specific retirement accounts. You’ll just pay the federal government taxes each year on the withdrawals you make.

Here are some states where you will end up with more money in your pocket.

1. Texas

The Lone Star State doesn’t have any state income tax, making it an attractive option for retirees. Add that to a mild climate and plenty to see and do, it’s no wonder millions choose it as their home.

Texas is home to one of the largest senior populations in the country, 5.7 million, or 60% are over 60.

2. Florida

Florida is a huge melting pot with retirees and people moving from across the country to benefit from its lack of state income tax.

The Sunshine State has the largest senior population in the country, 20% of those who live there are 65 and older, while 40% are at least 50.

3. Alaska

Alaska is an unusual place to retire, but you’ll definitely enjoy a different kind of lifestyle there. As an upside, you’ll have more money in your pocket to enjoy.

Like Florida and Texas, a good chunk of Alaska’s population, 21%, are aged 60 or older. That subset of the population has grown by 73% in the last 14 years.

4. Wyoming

Wyoming is home to gorgeous views and landscapes that attract millions of visitors each year. It’s also a state with no income tax, which makes it an attractive option for retirees.

Nearly a quarter of Wyoming’s population, 23.3%, is at least 60, and 16.4% of them were at least 65 or older in 2023.

5. South Dakota

Home to Mount Rushmore and several national and state parks, South Dakota is a retiree’s haven, minus the cold weather in the winter.

Approximately 16% of South Dakota’s population consists of those 65 and older. According to the US Census, the population over 60 may exceed 27% by 2030.

6. New Hampshire

New Hampshire is one of those states that continually draws you in and retirees are no exception. In fact, more than 200,000 call The Granite State home.

There is one notable exception for New Hampshire. If you earn dividends or interest payments, outside of your 401(k) or IRA, you’ll pay taxes for 2024, but beyond that it phases out.

7. Nevada

Nevada is so much more than just home to Las Vegas, it’s a diverse state that more than 3 million people call home. No income tax makes it a viable option for people looking to keep more money in their pockets.

More than 16% of its population is over the age of 65 and that is projected to grow in the coming years.

8. Washington

Washington state is home to nearly 8 million people, more than 17% of which are age 65 and older. The only downside is the state is very costly to live in, which can put a pinch on retirees living on a budget.

Washington state may not have an income tax, but it does tax capital gains, which could affect several retirees, especially those with notable assets.

9. Tennessee

Tennessee is known for its laidback country folks who know how to live life at a slower pace. While there are younger, hipper cities, like Nashville, a large subset of the state’s population, more than 17%, is over the age of 65.

This makes it one of the top states that retirees call home.

These 4 States Don’t Tax Retirement Income

Pennsylvania, Mississippi, and Iowa are anomalies in that each of these four states has income taxes, but it will not levy them on retirement income.

If you have no other income throughout the year, you could move to any of them and only have to pay federal taxes each year. That gives you more options to move in retirement and still have more money in your pocket.

Other Notable Exceptions

There are a few other states you can move to and enjoy no state income tax if you have specific retirement plans. For example, Hawaii doesn’t tax distributions you take from your pension as long as you don’t contribute to them.

Alabama doesn’t tax pensions from defined benefit retirement plans or Social Security benefits. It will, however, tax IRA and 401(k) income. Additionally, there are 28 total states so far that don’t tax Social Security benefits, so if that is your only retirement plan, you’re okay as far as taxes go.