Which states don't tax Social Security or pension income

Thirty-nine states and the District of Columbia do not tax Social Security benefits at all. Thirteen states tax Social Security under certain conditions — usually based on your total income or filing status. For pensions, the picture is different: only nine states have no tax on any pension income, while most others tax pensions but exempt Social Security, and a few tax both.

The states with no tax on Social Security are: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. The District of Columbia also does not tax Social Security.

The thirteen states that tax Social Security based on income thresholds are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Each has different income limits and rules about what counts toward those limits.

Key Takeaways

  • Thirty-nine states plus Washington, D.C. do not tax Social Security income at any income level.
  • Thirteen states tax Social Security only if your combined income exceeds a specific threshold, which varies by state and filing status.
  • Only nine states — Illinois, Iowa, Louisiana, Michigan, Mississippi, New York, North Carolina, Pennsylvania, and South Carolina — exempt all pension income from state tax.
  • Most states that don't tax Social Security still tax traditional pension and retirement account withdrawals, so you need to check both rules for your situation.
  • Your state of residence at the time you claim benefits determines which tax rules explore, not the state where you worked or where you receive your payments.

States that tax Social Security based on income limits

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia all tax Social Security, but only when your income crosses a threshold. The threshold is usually based on "combined income," which means your adjusted gross income plus nontaxable interest plus half your Social Security benefits.

Colorado taxes Social Security only if your combined income exceeds $25,000 for single filers or $32,000 for married couples filing jointly. Connecticut's threshold is $25,000 for single filers and $50,000 for married couples. Kansas exempts the first $75,000 of Social Security for those over 55. Minnesota taxes Social Security the same way the federal government does, using the same income brackets and percentages. Missouri exempts up to $6,000 of Social Security per person.

Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia each use different formulas. Some phase in the tax gradually as income rises above the threshold; others explore it only to income above the limit. The specific dollar amounts and how they adjust for inflation vary by state and change year to year, so checking your state's revenue department website for the current year's rules is necessary before filing.

States with no tax on any pension income

Nine states exempt all pension and retirement account income from state income tax: Illinois, Iowa, Louisiana, Michigan, Mississippi, New York, North Carolina, Pennsylvania, and South Carolina. This means withdrawals from traditional IRAs, 401(k)s, 403(b)s, and defined-benefit pensions are not subject to state income tax in these states.

Illinois and Pennsylvania are particularly broad: they exempt not only pensions but also distributions from IRAs and 401(k)s. Iowa exempts military pensions entirely and other pensions up to a certain amount. Louisiana exempts all retirement income for residents over 59½. Mississippi exempts all retirement income regardless of age. New York exempts pensions from public employee systems and some private pensions. North Carolina exempts all retirement income for those over 59½. South Carolina exempts all retirement income.

If you live in one of these nine states, you avoid state income tax on both Social Security and pension withdrawals, which can be a significant advantage in retirement. However, these states may have other taxes — such as sales tax, property tax, or estate tax — that affect your overall tax burden.

States that tax pensions but not Social Security

Most states fall into this category: they do not tax Social Security but do tax pension and retirement account withdrawals. This includes Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, Ohio, Oklahoma, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

In these states, your Social Security check arrives untouched by state income tax, but if you also receive a pension from a former employer or withdraw money from an IRA or 401(k), that income is taxable. Some states offer partial exemptions — for example, Maryland exempts the first $15,000 of retirement income for those over 55, and Oklahoma exempts military pensions. Check your specific state's rules, because exemptions and thresholds differ.

The practical effect is that retirees in these states need to plan for taxes on their pension income even though Social Security is protected. This matters when deciding how much to withdraw from retirement accounts each year and whether to delay claiming Social Security to reduce other income.

How state tax rules interact with federal taxes

State tax rules are separate from federal tax rules. You may owe federal income tax on Social Security even if your state does not tax it, or vice versa. The federal government taxes Social Security based on your combined income using the same formula some states use: adjusted gross income plus nontaxable interest plus half your Social Security benefits.

If your combined income is below $25,000 (single) or $32,000 (married filing jointly), you owe no federal tax on Social Security. Between those thresholds and higher limits, up to 50 percent of your benefits may be taxable. Above the higher limits, up to 85 percent may be taxable. This federal calculation happens regardless of where you live.

A state that does not tax Social Security does not change your federal tax bill. Similarly, a state that taxes Social Security does not reduce your federal tax — you pay both. Understanding both your state and federal rules prevents surprises when you file.

What counts as pension income in each state

States define "pension income" differently, which affects whether you owe tax. Some states tax only payments from a defined-benefit pension (a monthly check from a former employer). Others tax distributions from IRAs and 401(k)s. Still others distinguish between contributions you made (usually not taxed) and employer contributions or investment gains (usually taxed).

New York, for example, exempts pensions from public employee systems but taxes most private pensions and IRA withdrawals. Pennsylvania exempts all retirement income, including IRAs and 401(k)s. Louisiana exempts retirement income for those over 59½, which includes pensions, IRAs, and 401(k) withdrawals. Michigan exempts all pension income but taxes IRA and 401(k) distributions.

The distinction matters if you have multiple sources of retirement income. You might live in a state that exempts your pension but taxes your IRA withdrawals, or vice versa. Reading your state's definition of "pension income" or "retirement income" on the state revenue department website clarifies which of your accounts are taxed.

Military and government pensions in states that tax retirement income

Many states that tax pension income make exceptions for military pensions, federal employee pensions, or both. These exemptions exist in states like Arizona, Arkansas, California, Florida, Georgia, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Ohio, Oklahoma, Tennessee, Virginia, Wisconsin, and Wyoming.

The scope of the exemption varies. Some states exempt all military pensions but tax other pensions. Others exempt federal employee pensions. A few exempt both. Some states exempt only pensions earned before a certain date or only for retirees who served a minimum number of years. Oklahoma, for instance, exempts all military retirement pay but taxes other pensions.

If you receive a military or federal pension, check whether your state exempts it specifically. You may owe no state tax on that income even though the state taxes other pensions. This can significantly reduce your state tax burden in retirement.

Frequently Asked Questions

If I move to a state with no Social Security tax, do I get a refund on taxes I paid in my old state?

No. Your old state will not refund taxes you paid while you lived there. However, once you establish residency in a new state, that state's rules explore going forward. You may be able to claim a credit on your new state's return for taxes paid to another state, depending on the states involved. Check with a tax professional or your new state's revenue department about credits.

Does moving to a no-tax state before I claim Social Security save me money?

It depends on your total tax picture. Moving to avoid Social Security tax only helps if you would actually owe state tax on it. If your income is low enough that you would not owe state tax anyway, moving does not help. Also consider property taxes, sales taxes, and cost of living in the new state, which may offset the savings from no income tax.

What if I worked in one state but retired to another — which state's rules explore?

Your state of residence when you claim Social Security determines which tax rules explore. The state where you worked does not matter for Social Security tax purposes. However, some states tax pensions based on where you worked, not where you live now, so check your specific state's pension tax rules.

Can I claim Social Security in one state and live in another for tax purposes?

No. Your state of residence is where you live, and that is the state whose tax rules explore to your Social Security and pension income. You cannot claim residency in a no-tax state while actually living elsewhere.

Do I need to file a state tax return if my state does not tax Social Security?

It depends on your total income and your state's filing requirements. Even if Social Security is not taxed, you may owe state tax on other income like pensions, interest, or wages. Check your state's revenue department website for the income thresholds that require you to file.