Retirement Tax Calculator By State
Calculate how much taxes, by state, you’ll have to pay in retirement.
What States Do Not Tax Social Security Income
When it comes to retirement income, the tax implications can greatly affect a retiree’s financial planning. One significant aspect to consider is the taxation of Social Security benefits. While some states tax Social Security income, others offer exemptions and exclusions that provide much-needed relief for retirees. In fact, a total of 41 states, along with the District of Columbia, do not tax Social Security income. This means that retirees living in these states can enjoy their Social Security benefits without worrying about state taxes eating into their income.
The following are states that don’t tax Social Security benefits
- Alabama.
- Alaska.
- Arizona.
- Arkansas.
- California.
- Delaware.
- Florida.
- Georgia.
- Hawaii.
- Idaho.
- Illinois.
- Indiana.
- Iowa.
- Kentucky.
- Louisiana.
- Maine.
- Maryland.
- Massachusetts.
- Michigan.
- Mississippi.
- Missouri.
- Nebraska.
- Nevada.
- New Hampshire.
- New Jersey.
- New York.
- North Carolina.
- North Dakota.
- Ohio.
- Oklahoma.
- Oregon.
- Pennsylvania.
- South Carolina.
- South Dakota.
- Tennessee.
- Texas.
- Virginia.
- Washington.
- Washington, D.C.
- West Virginia.
- Wisconsin.
- Wyoming.
However, it’s worth noting that there are 9 states that do tax Social Security benefits:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
What States Don’t Tax Pension Income
The following states do not tax pensions:
- Alaska
- Florida
- Iowa
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
- New Hampshire
- Alabama
- Illinois
- Hawaii
- Mississippi
- Pennsylvania
States That Won’t Tax Your TSP Income
The following states are exempt from income taxes on Thrift Savings Plan (TSP) Income:
- Alaska
- Florida
- Illinois
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
- Illinois
- Mississippi
- Pennsylvania
Free Tool: Estimate Your Withdrawals With Our TSP Retirement Calculator
States With No Income Taxes
The following are tax-free states.
- Alaska
- Florida
- Nevada
- New Hampshire (earned wages only)
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
States That Won’t Tax Your Retirement Income
The following states are exempt from income taxes on retirement plans like 401k, IRA, annuity, and pensions:
- Illinois
- Mississippi
- Pennsylvania
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Related Tools:
- 401K Monthly Payout Calculator
- IRA Monthly Payout Calculator
States That Won’t Tax Your Pension But Tax 401ks and IRAs
The following states are exempt from income taxes on pension income but will be taxed on 401k and IRA income:
- Alabama
- Hawaii
Keep up with inflation, avoid running out of money, and maintain control over your pension, 401k, or IRA funds by reading our guide to guaranteeing income for your retirement.
Retirement Distributions Comparison
Now that you know where to maximize your retirement income, the next question is how to maximize distributions from retirement accounts. The table below compares withdrawals from various retirement plans (excluding Social Security Benefits).
| Features | Annuity | 401k | IRA | Roth IRA |
|---|---|---|---|---|
| Withdrawal Percentage | 5.20% – 6.55% | 4% | 4% | 4% |
| Can Income Increase? | Yes | Yes | Yes | Yes |
| Can Income Decrease? | No | Yes | Yes | Yes |
| How Long Will Money Last? | Lifetime | 30 Years+ | 30 Years+ | 30 Years+ |
| Annual Fees | 0 – 1.50% | 1% – 4% | 1% – 4% | 1% – 4% |
| Taxation | Taxable/Tax-Free | Taxable | Taxable | Tax-Free |
| Death Benefit | Account Balance | Account Balance | Account Balance | Account Balance |
Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:
- Annuity: Between $52,000 and $61,000
- 401k: $40,000
- IRA: $40,000
- Roth IRA: $40,000
Use our free annuity calculator to determine how much income you can generate from your IRA and 401k plans. Then request a quote.
Related Reading: Best Annuity Companies
States That Won’t Tax Your Estate or Inheritance
Even though there’s an estate tax on a federal level, the following states are exempt from “death taxes” such as estate taxes or inheritance taxes:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Delaware
- Florida
- Georgia
- Idaho
- Indiana
- Iowa
- Kansas
- Kentucky (Estate Tax Only)
- Louisiana (Inheritance Tax only)
- Maryland (Taxes can be an exemption if requirements are met)
- Michigan
- Mississippi
- Missouri
- Montana
- Nebraska (Estate Tax Only)
- Nevada
- New Hampshire
- New Jersey (Estate Tax Only)
- New Mexico
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania (No Estate Tax. No Inheritance Tax Depending On Beneficiary)
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- West Virginia
- Wisconsin
- Wyoming
Helpful tip: Life insurance might be better if you want to leave money to your beneficiaries. In some cases, you don’t need to take a medical exam. Instead, compare instant life insurance quotes to determine if affordable coverage is available. Coverage starts at $9.37 per month. Proceeds are tax-free.
If you have a qualified retirement plan to leave to beneficiaries, read this guide on reducing the tax burden for your heirs.
States That Don’t Have Sales Tax
The following states are exempt from state sales taxes:
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
States That Don’t Tax Military Retirement Income
States that don’t tax military retirement pay include:
- Alabama
- Arkansas
- Connecticut
- Hawaii
- Illinois
- Iowa
- Kansas
- Louisiana
- Maine
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- New Jersey
- New York
- North Dakota
- Ohio
- Pennsylvania
- Utah
- West Virginia
- Wisconsin
Next steps
If you’re nearing retirement or are already retired, it’s essential to understand the tax laws in your state. Depending on where you live, you may be able to minimize the amount of taxes you pay on your retirement income. Request a quote from our team of experts, and we can help you find the best way to reduce your taxable income in retirement. Thanks for reading!
Learn How To Retire Comfortably In Each State
If you have any questions regarding how to spend your retirement funds wisely and retire comfortably, please do not hesitate to ask.
Frequently Asked Questions
Which states don’t tax my 401K, social security benefits, and military retirement pay?
You have to pay federal taxes in every state. However, some states don’t have state income taxes. These states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Another state that doesn’t have income taxes in New Hampshire.
Do you pay taxes on Social Security?
Some individuals who receive Social Security must pay federal income taxes on their payments. However, no one pays taxes on more than 85 percent of their Social Security benefits. If you file a federal tax return as an “individual” and your “combined income” is more significant than $25,000, you must pay taxes on your benefits.
What state has no income tax?
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have a state income tax.
What are the best states for taxes?
The best states for taxes depend on individual circ*mstances, but some tax-friendly states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
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*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!
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