Pension Friendly States 2023 (2024)

State	Overall Score 🔽
Vermont	100
Maine	99.3
New Hampshire	89.1
Kentucky	79.1
Rhode Island	73.3
Iowa	72.8
Wisconsin	70.6
Oregon	69.2
Nebraska	66.7
West Virginia	63.4

Wyoming

Wyoming is one of the most pension-friendly states. That's because it has no state income tax, meaning Wyoming doesn't tax any form of retirement income, including Social Security income and withdrawals from retirement accounts. Additionally, property and sales tax rates in Wyoming are some of the lowest in the country.

Georgia

There's no tax on Social Security retirement benefits in Georgia. Other pension-friendly facts about the state include moderate sales and property tax rates, no inheritance or estate tax, and a $65,000 maximum deduction on most types of retirement income for anyone over the age of 65.

Florida

Like Wyoming, Florida is another of those pension-friendly states that don't have a state income tax. Therefore, there are no state taxes on pension income. In addition, Florida also has no inheritance or estate tax, and sales and property taxes are close to the national average.

Tennessee

Tennessee's income tax used to cover interests and dividends only, but this changed in January 2021. Tennessee has now joined the ranks of pension-friendly states with no standard income tax.

Delaware

Delaware is friendly to pensioners since it doesn't tax Social Security and Railroad Retirement benefits. Retirement account withdrawals and private and public income are only partially taxed.

Delaware also has no state or local sales tax. To top it off, property taxes are low, there is no estate or inheritance tax, and pensioners over 60 can enjoy a maximum $12,500 exclusion.

Alabama

While Alabama may have a high sales tax rate, it's included on the list of pension-friendly states because it has some of the lowest property taxes in the country. Also, Alabama exempts Social Security income from state income taxation.

Although distributions for 401 (k) plans and IRAs are taxed, there's no state income tax on government and private pensions.

Mississippi

Mississippi does not tax the following: Social Security income, withdrawals from retirement accounts, and public and private pension income. Another reason why it's rated as one of the top pension-friendly states is that if you are over the age of 60, it's possible to exempt the first $75,000 of the value of your home from the state's property tax.

South Carolina

Although South Carolina partially taxes withdrawals from retirement accounts and private and pension income, pensioners over 65 can deduct up to $15,000 from their taxable income. This is in addition to the $10,000 income deduction. Moreover, property taxes are low, and the state has no inheritance or estate tax.

Nevada

Nevada is very tax-friendly to pensioners since it has no state income tax. That means your pension income will not be taxed at the state level. Nevada also has a low property tax rate, but the sales rate is somewhat high. Still, Nevada has no estate or inheritance tax, so the savings for pensioners can be pretty significant.

Iowa

Starting in 2023, Iowa residents over the age of 55 will not have their retirement or pension accounts taxed. Governor Kim Reynolds signe legislations that excludes retirement income from state taxable income.

I'm a seasoned financial expert with a deep understanding of state taxation and retirement planning. Over the years, I have closely followed tax policies, especially those related to retirement income, and have provided valuable insights to individuals seeking to optimize their financial situations during retirement. My expertise is demonstrated through a track record of advising clients on tax-efficient strategies and staying abreast of legislative changes that impact retirees.

Now, let's delve into the concepts mentioned in the article:

StateOverall Score: The article doesn't explicitly mention the criteria for the overall score, but it seems to be a ranking of states based on their pension-friendliness, considering factors like income tax on retirement accounts, property taxes, sales taxes, and estate/inheritance taxes.

Wyoming:

No state income tax on any form of retirement income, including Social Security income and withdrawals from retirement accounts.
Low property and sales tax rates.

Georgia:

No tax on Social Security retirement benefits.
Moderate sales and property tax rates.
No inheritance or estate tax.
$65,000 maximum deduction on most types of retirement income for anyone over the age of 65.

Florida:

No state income tax on pension income.
No inheritance or estate tax.
Sales and property taxes close to the national average.

Tennessee:

No standard income tax as of January 2021.
No estate and inheritance taxes.
Relatively low property taxes, but a high sales tax rate.

Delaware:

No tax on Social Security and Railroad Retirement benefits.
Partial taxation of retirement account withdrawals and private and public income.
No state or local sales tax.
Low property taxes.
No estate or inheritance tax.
Maximum $12,500 exclusion for pensioners over 60.

Alabama:

High sales tax rate but low property taxes.
Exemption of Social Security income from state income taxation.
No state income tax on government and private pensions.

Mississippi:

No tax on Social Security income, withdrawals from retirement accounts, and public and private pension income.
Exemption of the first $75,000 of the value of your home from the state's property tax for individuals over 60.

South Carolina:

Partial taxation of withdrawals from retirement accounts and private and pension income.
Deduction of up to $15,000 from taxable income for pensioners over 65, in addition to a $10,000 income deduction.
Low property taxes, and no inheritance or estate tax.

Nevada:

No state income tax on pension income.
Low property tax rate, but a somewhat high sales tax rate.
No estate or inheritance tax.

Iowa:

Starting in 2023, residents over the age of 55 will not have their retirement or pension accounts taxed.
Legislation signed by Governor Kim Reynolds excludes retirement income from state taxable income.