Taxes in Retirement: How All 50 States Tax Retirees

Alabama taxes on retirees

A new law effective last year makes the first $6,000 or distributions from retirement plans (like IRAs and 401(k)s tax-exempt for retirees age 65 and older in Alabama. 

Income Tax on Taxable Income: Low of 2% (on up to $500 for single filers and $1,000 for joint filers) and a high of 5% (on more than $3,000 for single filers and $6,000 for joint filers)

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Partially taxable 

More: Alabama State Tax Guide

Alaska retirement taxes

Alaska doesn't have a personal income tax, meaning that none of your retirement income is taxable on the state level.

Income Tax on Taxable Income: N/A

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Not taxable

More: Alaska State Tax Guide

Does Arizona tax your retirement income?

Arizona taxes most types of retirement income, but a new flat income tax rate, effective last year, might help lower your tax bill. 

Income Tax on Taxable Income: 2.5% flat rate

• Social Security: Not taxable
• 401(k) and IRA Distributions: Taxable
• Pensions: Taxable (some types of pensions qualify for an exemption of up to $2,500)

More: Arizona State Tax Guide

Does Arkansas tax Social Security?

Arkansas is another state that taxes most types of retirement income, but taxpayers 59.5 or older can deduct up to $6,000 of eligible retirement income from their taxable income.

Income Tax on Taxable Income: Low of 0% (on up to $5,099) and a high of 4.4% (on more than $24,300)

Note: The tax rates above only apply to taxpayers with net incomes up to $84,500. Taxpayers with higher net incomes may reach higher tax brackets sooner.

• Social Security: Not taxable
• 401(k) and IRA distributions: Taxable
• Pensions: Taxable (military pensions are tax-exempt)

More: Arkansas State Tax Guide

How retirement income is taxed in California

California is ranked by Kiplinger as one of the worst states to retire when it comes to taxes. Some retirees might pay an income tax rate as high as 14.4% (if they are still working and their taxable income reaches $1,000,000), but most retirees will pay a lower rate.

Income Tax on Taxable Income: California has ten income tax brackets, which is more than in most states. Rates range from 1% to 14.4%. Effective for 2024, a California tax expansion mandates a 1.1% payroll tax for employees making more than $1 million. So, if you're a high earner who is still working during retirement, you could pay more state tax than you did last year.

• Social Security: Not taxable
• 401(k) and IRA Distributions: Taxable
• Pensions: Taxable

More: Worst States to Retire (Due to Taxes)

Is Colorado a good tax state for retirees?

Although Colorado taxes Social Security benefits, some retirees can exclude all their Social Security benefits from their taxable income. Colorado also allows a retirement income deduction of up to $20,000 for taxpayers 55 and older. Retirees 65 and older may deduct up to $24,000.

Income Tax on Taxable Income: Flat rate of 4.4%

• Social Security: Partially taxable for some retirees (fully deductible for taxpayers 65 and older)
• Pensions: Partially taxable
• 401(k) and IRA Distributions: Taxable

More: Colorado EV Tax Credit Rises to $5,000

How retirement income is taxed in Connecticut

Social Security is not taxed in Connecticut for single taxpayers with an AGI below $75,000 ($100,000 for joint filers). However, a recent Connecticut tax relief bill phases out the income requirements, making Connecticut income tax more affordable for all Social Security recipients. Pension income and IRA distributions may also be exempt (or partially exempt) for taxpayers meeting income requirements.

Income Tax on Taxable Income: Low of 2% (on up to $10,000 for single filers and $20,000 for joint filers) and a high of 6.99% (on more than $500,000 for single filers and $1,000,000 for joint filers).

• Social Security: Partially taxable
• Pensions: Partially taxable
• 401(k) and IRA Distributions: Partially taxable

More: Who Benefits from the Connecticut Tax Relief Bill?

Delaware taxes on retirees

Delaware taxes most types of retirement income, but the good news is that Delaware offers a pension exclusion that allows taxpayers 60 and older to deduct up to $12,500 of qualified retirement plans (including 401(k)s from their taxable income.

Income Tax on Taxable Income: Low of 0% (on up to $2,000) and a high of 6.6% (on more than $60,000)

• Social Security: Not taxable
• Pensions: Partially taxable
• 401(k) and IRA Distributions: Partially taxable

More: Most Expensive States for Retired Military Service Members

District of Columbia retirement taxes

Most of your retirement income is taxable in DC. However, residents can deduct up to $3,000 of retirement income when filing their taxes. Washington DC has an estate tax on estates worth more than $4,528,800, and your heirs could pay up to 16% in taxes to call the estate their own.

Income Tax on Taxable Income: Low of 4% (on less than $10,000) and a high of 10.75% (on more than $1,000,000)

• Social Security: Not taxable
• Pensions: Taxable
• 401(k) and IRA Distributions: Taxable

More: District of Columbia Tax Guide

Florida retirement tax friendliness

There is no personal income tax in Florida. The state won’t tax your pension or any other type of retirement income. There are no estate or inheritance taxes either.

Income Tax on Taxable Income: N/A

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Not taxable

More: 5 Reasons People Retire in Florida

Georgia taxes on retirees

Georgia taxes most retirement income, but the state offers a hefty retirement income exclusion. Taxpayers age 62 and older may exclude up to $35,000 of their retirement income, and those age 65 and older can exclude up to $65,000 of retirement income.

Income Tax on Taxable Income: Flat 5.49%

• Social Security: Not taxable
• Pensions: Partially taxable
• 401(k) and IRA Distributions: Partially taxable

More: Another New IRS Georgia Tax Deadline: What You Need to Know

What taxes do retirees pay in Hawaii?

Hawaii exempts some retirement income, but income tax rates are on the high end for retirement income that is taxable. Hawaii also has an estate tax. The estate tax exemption is $5.49 million in Hawaii, and estates that exceed the exemption are taxed between 10% and 20%.

Income Tax on Taxable Income: Low of 1.4% (on up to $4,800 for joint filers and $2,400 for single filers) and a high of 11% 

• Social Security: Not taxable
• Pensions: Not taxable (as long as you don’t make contributions)
• 401(k) and IRA Distributions: Taxable

More: States That Won't Tax Your Pension

Idaho taxes on retirees

Idaho taxes most types of retirement income and has a flat tax rate. However, there are no estate or inheritance taxes in Idaho.

Income Tax on Taxable Income: 5.8% flat tax rate

• Social Security: Not taxable
• Pensions: Partially taxable (Some military and government pensions might qualify for an exemption)
• 401(k) and IRA Distributions: Taxable

More: Idaho State Tax Guide

Is retirement income taxed in Illinois?

Illinois is a state that exempts all retirement income. But there is an estate tax in Illinois, which has a $4 million exemption. Estates exceeding that value are taxed between 0.8% and 16%.

Income Tax on Taxable Income: Flat 4.95%

• Social Security: Not taxable
• Pensions: Not taxable
• 401k and IRA Distributions: Not taxable

More: States That Don't Tax Retirement Income

Does Indiana tax Your retirement income?

Indiana has a low flat tax rate for taxable income, and that’s a good thing since the state only exempts Social Security. However, there are no estate or inheritance taxes in Indiana.

Income Tax on Taxable Income: Flat 3.05%

• Social Security: Not taxable
• 401(k) and IRA Distributions: Taxable
• Pensions: Taxable

More: Indiana State Tax Guide

Iowa taxes on retirees

Iowa recently made retirement income tax-exempt for residents 55 and older. There is an inheritance tax in Iowa, but it will be eliminated in 2025.

Income Tax on Taxable Income: High of 5.7% for 2024 (on more than 31,050 for single filers and more than $62,100 for joint filers) 

(Note: Iowa will move to a flat tax rate of 3.9% in 2026.)

• Social Security: Not taxable
• Pensions: Not taxable
• 401k and IRA Distributions: Not taxable

More: Iowa State Tax Guide

How does Kansas tax retirement income?

Kansas only exempts retirement income for some retirees depending on adjusted gross income (AGI), but some state lawmakers are trying to expand the exemption to include more residents.

Income Tax on Taxable Income: Low of 3.1% (on up to $30,000) and a high of 5.7% (on more than $60,000)

• Social Security: Partially taxable (Exempt for retires with an AGI of $75,000 or less)
• Pensions: Taxable (Public pensions are exempt)
• 401(k) and IRA Distributions: Taxable

More: Kansas State Tax Guide

Is retirement income taxable in Kentucky?

Kentucky taxes most types of retirement income. However, some types of retirement income qualify for an exclusion. For example, there is a $31,110 deduction available for state, private and military retirement plans.

Tax on Taxable Income: Flat 4% for 2024

• Social Security: Not taxable
• Pensions: Partially Taxable
• 401(k) and IRA Distributions: Taxable

More: Kentucky State Tax Guide

Louisiana taxes on retirees

Louisiana taxes some retirement income, but there is an income exclusion of up to $6,000 for retirees age 65 and older. There is no inheritance tax in Louisiana.

Income Tax on Taxable Income: Low of 1.85% (on up to $12.500 for single filers and $25,000 for joint filers) and a high of 4.25% (on more than $50,000 for single filers and $100,000 for joint filers)

• Social Security: Not Taxable
• Pensions: Taxable (Public and government pensions are exempt)
• 401(k) and IRA Distributions: Taxable

More: States With the Lowest Property Taxes

What taxes do retirees pay in Maine?

Maine taxes some forms of retirement income, but there is a pension exclusion of up to $30,000 ($35,000 in 2024). However, Maine has an estate tax. The estate exemption is $6.41 million, and heirs are taxed between 8% and 12%.

Income Tax on Taxable Income: Low of 5.8% (on up to $24,500 for single filers and $49,050 for joint filers) and a high of 7.15% (on more than $58,050 for single filers and $116,100 for joint filers)

• Social Security: Not taxable
• Pensions: Partially taxable (Federal pension income is exempt)
• 401(k) and IRA Distributions: Taxable

More: Tax Relief for Maine and Massachusetts Following Hurricane Lee

What retirement income is taxed in Maryland?

Maryland taxes some retirement income, and localities can tax your income. However, there is a pension exclusion of up to $34,300 for retirees age 65 and older. Maryland has both an estate and inheritance tax. The estate tax exemption is $5 million, and the inheritance tax ranges from 0.9% to 10%.

Income Tax on Taxable Income: Low of 2% (on up to $1,000) and a high of 5.75% (on more than $250,000 for single filers and $300,000 for joint filers)

• Social Security: Not taxable
• Pensions: Partially taxed (due to pension exclusion)
• 401(k) and IRA Distributions: Taxable

More: States With the Highest Gas Taxes

Massachusetts taxes on retirees

Massachusetts taxes most retirement income and imposes an estate tax .The estate tax exemption is $2 million for 2024. Estate taxes can jump as high as 16% in the Bay State.

Tax on Taxable Income: Flat rate of 5%

(Note: Income over $1 million is subject to an additional 4% tax.)

• Social Security: Not taxable
• Pensions: Taxable (Government and public pension plans may be tax-exempt)
• 401(k) and IRA Distribution: Taxable

More: Massachusetts Millionaire's Tax Funds Free K-12 School Lunches

Michigan retirement tax friendliness

For tax year 2023, retirees born in 1945 or before can deduct up to $61,518 ($123,036 for joint filers) of eligible retirement income. Retirees born between 1946 and 1952 may exclude up to $15,379.50 ($30,759 for joint filers) of eligible retirement income in 2023. Michigan recently passed legislation that will allow retirees to claim the maximum pension deduction in 2026, regardless of age. 

Tax on Taxable Income: Flat 4.25% for 2024 (4.05% for the 2023 tax year)

• Social Security: Not taxable
• Pensions: Partially taxable (Military pensions are tax-exempt)
• 401(k) and IRA Distributions: Partially taxable

More: Michigan State Tax Guide

Does Minnesota tax retirement income?

Minnesota taxes most retirement income. To make matters worse, the lowest income tax bracket is high in Minnesota when compared to other states. There is also an estate tax that applies to estates valued over $3 million. The bright side is Minnesota does not have an inheritance tax.

Tax on Taxable Income: Low of 5.3% (on up to $30,070 for single filers and $43,950 for joint filers) and a high of 9.85% (on more than $183,340 for single filers and $304,970 for joint filers)

• Social Security: Partially taxable
• Pensions: Taxable (Maryland allows a deduction for Military retirement pay)
• 401(k) and IRA Distributions: Taxable

More: IRS Will Tax Your ‘Walz Check’ Minnesota Rebate: What to Know

Mississippi taxes on retirees

Retirement income is exempt in Mississippi, but other types of income (including early withdrawals from retirement accounts) are still taxable. However, the income tax rate on taxable income is low, and it is set to decrease in the coming years.

Tax on Taxable Income: Flat 4.7% tax rate for 2024

(Note: Mississippi’s income tax rate will gradually decrease until it reaches 4% in 2026.)

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Not taxable

More: Mississippi State Tax Guide

Does Missouri tax your retirement income?

Missouri eliminated the tax on all Social Security retirement benefits, effective beginning with the 2024 tax year.

Tax on Taxable Income: Low of 2% (on up to $2,414) and a high of 4.8% (on more than $8,449)

• Social Security: Not taxable
• Pensions: Partially taxable (Public pensions are exempt.)
• 401(k) and IRA Distributions: Taxable

More: Missouri State Tax Guide

Montana taxes on retirees

Montana repealed several tax deductions, including the partial pension, annuity, and IRA deduction, for the 2024 tax year. Retirees can now deduct up to $5,500 of qualified retirement income.

Tax on Taxable Income: Low of 4.7% (on up to $20,500 for single filers and $41,000 for joint filers) and a high of 5.9% for taxable income exceeding those thresholds for 2024.

• Social Security: Taxable (Partially deductible)
• Pensions: Taxable
• 401(k) and IRA Distributions: Taxable

More: Montana Property Tax Rebates and Other Relief for Homeowners

Does Nebraska tax retirement income?

Nebraska no longer taxes Social Security. However, retirees will still need to pay Nebraska income tax on other types of retirement income.

Tax on Taxable Income: For 2024, a low of 2.46% (on up to $2,999 for single filers and $5,999 for joint filers) and a high of 5.84% (on $$29,000 or more for single filers and $58,000 or more for joint filers)

• Social Security: Not taxable for 2024 
• Pensions: Taxable: (Military retirement pay is exempt)
• 401(k) and IRA Distributions: Taxable

More: The Most Expensive States to Die In (Due to Death Taxes)

Is retirement income taxed in Nevada?

Nevada is one of the states with no income tax, so you don’t need to worry about having any of your retirement income taxed on the state level. There are no estate or inheritances taxes to worry about in Nevada either.

Tax on Taxable Income: N/A

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Not taxable

More: 10 Most Tax-Friendly States for Retirees

New Hampshire taxes on retirees

There is no state income tax in New Hampshire, so your Social Security, benefits, pension, and retirement distributions are safe. However, New Hampshire currently taxes interest and dividend income at 3% (4% for the 2023 tax year). This tax will be eliminated in 2025.

Tax on Taxable Income: N/A (with the exception of interest and dividend income)

• Social Security: Not taxable
• Pensions: Not taxable
• 401(k) and IRA Distributions: Not taxable

More: New Hampshire State Tax Guide

What taxes do retirees pay in New Jersey?

New Jersey taxes most types of retirement income, but most retirees age 62 and older can deduct a significant portion of their taxable income. As long as your federal AGI doesn’t exceed $150,000, you can deduct the maximum amount allowed based on your filing status. The maximum deductions are $75,000 for single filers, $50,000 for married filing separately, and $100,000 for joint filers.

Tax on Taxable Income: Low of 1.4% (on up to $20,000) and a high of 10.75% (on more than $1 million)

• Social Security: Not taxable
• Pensions: Partially taxable (Income requirements apply)
• 401(k) and IRA Distributions: Partially taxable (Income requirements apply)

More: Most Expensive States for Millionaires

New Mexico retirement taxes

Thanks to legislation passed last year, most New Mexicans won’t pay state income tax on their Social Security benefits. Taxpayers age 65 and older can deduct up to $8,000 from their taxable income, and income for residents 100 years and older is completely tax-exempt in New Mexico.

Tax on Taxable Income: Low of 1.7% (on up to $5,500 for single filers and $8,000 for joint filers) and a high of 5.9% (on more than $210,000 for single filers and $315,000 for joint filers)

• Social Security: Taxable for single filers who earn more than $100,000 per year (more than $150,00 if married filing jointly)
• Pensions: Partially taxable
• 401(k) and IRA Distributions: Partially taxable

More: New Mexico State Tax Guide

How is retirement taxed in New York?

New York taxes most retirement income, but some taxpayers at least 59.5 years old can deduct up to $20,000 of qualified retirement income.

Tax on Taxable Income: Low of 4% (on up to $8,500 for single filers and $17,150 for joint filers) and a high of 10.9% (on more than $25,000,000 for all filers)

• Social Security: Not taxable
• Pensions: Taxable (Does not apply to federal, NYS, local, and military retirement income )
• 401(k) and IRA Distributions: Taxable

Note: You might qualify for New York's $20,000 pension and annuity exclusion, even if your retirement income is classified as taxable above. You can view Publication 36 for more information and to see if your retirement income qualifies.

More: Low-Tax States Gain Residents From California and New York

North Carolina taxes on retirees

North Carolina taxes most types of retirement income. But the state has a low flat income tax rate, and that rate will drop even lower over the next few years.

Tax on Taxable Income: Flat rate of 4.5% for 2024 

(Note: North Carolina’s income tax rate is set to gradually reduce until 2027 when it reaches 3.99%.)

• Social Security: Not taxable
• Pensions: Taxable
• 401(k) and IRA Distributions: Taxable

More: North Carolina State Tax Guide

Is retirement income taxable in North Dakota?

Recent legislation has made income tax in North Dakota affordable for many taxpayers. Even for retirement income that is subject to state income tax, the highest rate you will pay is 2.9%.

Tax on Taxable Income: Low of 0% (on up to $44,725 for single filers and $74,750 for joint filers) and a high of 2.9% (on more than $222,975 for single filers and $275,100 for joint filers)

• Social Security: Taxable
• Pensions: Taxable (Excluding military retirement pay)
• 401(k) and IRA Distributions: Taxable

More: North Dakota State Tax Guide

Ohio taxes on retirees

Ohio taxes most types of retirement income, but military retirement pay is tax-exempt, and the state’s tax brackets are low when compared with other states. There is no estate or inheritance tax in Ohio.

Tax on Taxable Income: Low of 2.75% (on between $26,051 - $100,000) and a high of 3.5% (on more than $100,000)

(Note: Ohio tax brackets depend on residency and filing status.)