13 States With No Income Tax for Retirees: A Guide to Tax-Efficient Retirement Planning

Planning where to spend your retirement years involves many considerations, and tax implications rank high on that list. If you’re approaching retirement or already there, you’ve likely wondered: which states with no income tax for retirees will let me keep more of my earnings? Understanding how different states treat retirement income can dramatically impact your financial security in later years.

The good news is that multiple states across the nation offer attractive tax advantages for retirees. Some eliminate income tax entirely, while others specifically exempt retirement income from taxation. Let’s explore the landscape and help you understand which states might align with your retirement goals.

Nine States Without Any State Income Tax

The most straightforward option for minimizing state taxes is to relocate to one of the nine states that don’t tax income at all—for anyone, not just retirees. These jurisdictions maintain their budgets through sales taxes, property taxes, and other revenue sources.

These nine states are:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

It’s worth noting that New Hampshire historically taxed dividend and interest income while exempting earned income. However, beginning in 2025, New Hampshire joined the majority by eliminating taxation on these investment returns. This change makes New Hampshire even more attractive for retirees with substantial investment portfolios.

Each of these states has structurally different tax systems, so while you avoid state income tax, evaluate their property tax rates, sales tax percentages, and other levies to get the complete picture of your total tax burden.

Four States That Exempt Retirement Income Specifically

Beyond the nine states with no income tax at all, four additional states take a targeted approach: they tax earned income generally but specifically exclude retirement income from taxation. This distinction matters if you plan to continue working part-time or if you have modest wages alongside your retirement benefits.

These four states are:

• Illinois
• Iowa
• Mississippi
• Pennsylvania

For retirees whose primary income comes from pensions, IRAs, 401(k)s, or other retirement accounts rather than employment, these states offer substantial savings while maintaining general income tax structures for working residents.

41 States Don’t Tax Social Security Benefits

Social Security benefits represent a cornerstone of retirement income for millions of Americans. Fortunately, 41 states—plus Washington, D.C.—don’t tax these benefits at all, making this the largest group of tax-advantaged jurisdictions.

The states that don’t tax Social Security benefits include: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, 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, Wisconsin, and Washington, D.C., plus Wyoming.

The Social Security Administration reports that the average monthly retirement benefit recently totaled approximately $1,979, translating to roughly $23,750 annually. For many retirees, Social Security forms the foundation of their retirement income, making residence in a state that doesn’t tax these benefits particularly valuable.

If you haven’t already, consider creating a “my Social Security” account through the Social Security Administration website to access personalized estimates of your future benefits based on your earnings history.

Nine States That Do Tax Social Security Benefits

Nine states currently tax Social Security benefits, though the burden often falls lighter than feared. Most of these states employ income thresholds or age-based exemptions, meaning lower-income retirees or those meeting certain age requirements may escape taxation entirely.

These nine states are:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

Encouragingly, this list has been shrinking. As of 2016, thirteen states taxed Social Security benefits. That means the number of states taxing these benefits has already decreased by roughly 30%, suggesting potential further improvements for future retirees. While the federal government does tax some Social Security benefits based on combined income calculations, state-level taxation represents an additional consideration worth monitoring.

The 13 States With No Income Tax for Retirees—The Complete Picture

When you combine all these tax advantages, thirteen states emerge that don’t tax any form of retirement income. These jurisdictions won’t touch your Social Security benefits, earned income, dividends, interest, withdrawals from retirement accounts, or pension payouts.

The 13 states with comprehensive retirement income tax exemptions are:

• Alaska
• Florida
• Illinois
• Iowa
• Mississippi
• Nevada
• New Hampshire
• Pennsylvania
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

This list represents the optimal destinations for tax-conscious retirees seeking to minimize their overall state tax burden. However, remember that the federal government continues to tax most retirement income, so these state-level advantages supplement rather than eliminate your tax obligations.

Building Your Complete Retirement Tax Strategy

While understanding which states with no income tax for retirees is crucial, tax planning represents just one component of comprehensive retirement preparation. A complete strategy should include:

Multiple income streams: Rather than relying solely on Social Security, consider building income from dividend-paying stocks, pensions, annuities, and strategic retirement account withdrawals. This diversification provides flexibility in managing your tax liability.

Comprehensive tax assessment: Evaluate not just income tax but also property taxes, sales tax rates, healthcare costs, and cost of living. A state with no income tax might have significantly higher property taxes or sales taxes that offset the advantage.

Professional guidance: Consider consulting with a tax professional or financial advisor who understands both your personal situation and state-specific retirement tax rules. They can model scenarios showing your after-tax retirement income under different state options.

Timing considerations: If relocation appeals to you, coordinate your move strategically around retirement timing, Social Security claiming age, and required minimum distributions from retirement accounts.

Understanding your options regarding states with no income tax for retirees empowers you to make informed decisions about where your retirement dollars can stretch furthest. Whether you choose to relocate or remain in your current home state, approaching retirement with clear knowledge of your tax landscape ensures you keep more of what you’ve earned.