Where you live in retirement can be worth a lot. State tax on pension income runs from nothing to a top rate of 13.3% in California, and the difference repeats every year you're retired. Here's how the states break down for 2026, checked against each state's own tax forms and statutes.
States with no tax on pension income
Nine states don't tax wages or pensions:
- Alaska
- Florida
- Nevada
- New Hampshire (its interest and dividends tax was repealed starting January 1, 2025)
- South Dakota
- Tennessee (the Hall tax on interest and dividends ended for tax years starting in 2021)
- Texas
- Washington (it taxes long-term capital gains, not pension payments)
- Wyoming
States that exempt most or all pension income
Illinois exempts pensions, IRAs and 401(k) withdrawals, public or private, at any age. The flat rate on other income is 4.95%.
Mississippi exempts qualified retirement income, public or private, when the plan's requirements are met. Early distributions can be taxed.
Pennsylvania exempts pensions from eligible employer plans once you retire under the plan's age or service rules, and IRA withdrawals after 59½. Its flat rate is 3.07%.
Iowa fully excludes pensions, IPERS benefits and IRA withdrawals once you're 55 or older (or disabled, or a surviving spouse).
Alabama exempts defined benefit pensions, public or private, including military and federal civil service. 401(k) and IRA withdrawals are taxed, less up to $6,000 per person at 65 or older.
Hawaii doesn't tax government pensions from any state or the federal government, or private pensions funded by the employer. Money you put in yourself, plus 401(k) and IRA withdrawals, is taxed.
States with large exclusions
Georgia excludes up to $65,000 per person of retirement income at 65 or older, or $35,000 at 62 to 64. A married couple both 65 or older can exclude up to $130,000. The rate for 2026 is a flat 4.99%.
Michigan lets every retiree, regardless of birth year, deduct up to $67,610 (single) or $135,220 (joint) of public and private retirement income for 2026.
New Jersey starts its pension exclusion at 62. With total income of $100,000 or less you can exclude up to $100,000 (joint) or $75,000 (single). A smaller share is excluded up to $150,000 of income, and none above that.
Maine deducts up to $49,824 of pension income for 2026, reduced by all Social Security received and phased out at high incomes.
Kentucky excludes up to $31,110 of pension and retirement income, public or private, and its 2026 rate is a flat 3.5%.
Colorado subtracts up to $24,000 per person of pension and annuity income at 65 or older, or $20,000 at 55 to 64. Any Social Security you subtract uses up the same limit.
Connecticut exempts 100% of pension income when federal AGI is under $75,000 ($100,000 joint). The exemption steps down above that and ends at $100,000 ($150,000 joint).
New York fully exempts New York State and local government pensions and federal pensions, including military. Private pensions and other states' government pensions get up to $20,000 per person at 59½ or older. The top rate is 10.9%.
States where the type of pension matters
Several states exempt their own public pensions but tax private ones. Kansas exempts KPERS and other Kansas public pensions, federal civil service and military pensions, but taxes private pensions and IRAs. Louisiana exempts Louisiana public, federal and military pensions, and gives other retirement income up to $12,000 per person at 65 or older. Massachusetts exempts contributory pensions from its state and local governments and the federal government, but taxes private pensions at 5%. Missouri exempts public pensions up to $47,633 per person (2025 cap), less your Social Security exemption, while private pensions get up to $6,000 with an income limit.
States with little or no pension break
California taxes pensions as ordinary income, CalPERS and CalSTRS included, at rates from 1% to 13.3%. Military retired pay gets up to a $20,000 exclusion for 2025 through 2029 if AGI is $125,000 or less ($250,000 joint).
Minnesota taxes private pensions at rates from 5.35% to 9.85%. Its public pension subtraction applies only to service that wasn't covered by Social Security.
Oregon taxes PERS and private pensions at rates from 4.75% to 9.9%. Federal and military retirees can subtract the share earned before October 1, 1991.
Virginia has no pension exclusion. Taxpayers 65 or older get a $12,000 age deduction, reduced dollar for dollar once income other than Social Security passes $50,000 single or $75,000 married.
Montana no longer has a pension exemption. Taxpayers 65 or older get a $5,660 subtraction per person (2025 amount).
North Carolina, Ohio, Utah and North Dakota also tax most pensions, though at low flat or top rates: 3.99%, 2.75% on income over $26,050, 4.45% and 2.5% respectively for 2026.
Federal pensions
Under 4 U.S.C. 111, a state can't tax federal retirement pay more heavily than it taxes its own government pensions. If a state exempts its own retirees' pensions, it has to exempt CSRS and FERS annuities on the same terms. That's why states like Kansas, Louisiana, Massachusetts and New York exempt federal pensions alongside their own. Some states go further for particular federal groups: Idaho's deduction covers CSRS but not FERS, Nebraska exempts CSRS annuities, and Indiana lets federal civil service annuitants 62 or older deduct up to $16,000 less Social Security.
Military retired pay
Most states now exempt military retired pay in full, including many that tax other pensions: Arizona, Arkansas, Connecticut, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio, Rhode Island, South Carolina and West Virginia among them. Others give a partial break. California's is the $20,000 exclusion above, and Virginia's is a subtraction of up to $40,000.
Lump sums and IRA rollovers
A pension lump sum you take as cash is taxable in the year you get it, by the state as well as the IRS. In a graduated-rate state like California, a large lump sum lands mostly in the top brackets. A direct rollover to an IRA defers both federal and state tax until you take distributions, and the state you live in when you take them is the one that taxes them.
Watch the state rules before you roll a public pension into an IRA. New York exempts New York public pensions but gives IRA withdrawals only the $20,000 exclusion. Kansas, Louisiana and Massachusetts exempt their own public pensions but not IRA withdrawals. Illinois, Iowa (55+) and Pennsylvania (after 59½) treat IRA withdrawals the same as pensions, so rolling over costs nothing there.
Social Security
Most states don't tax Social Security at all, and the few that do generally exempt it below income limits. Of the states above, Kansas, Missouri (at 62 or older), Nebraska, North Dakota, Ohio and West Virginia (for 2026) exempt it fully. Colorado lets taxpayers 65 or older subtract all federally taxed Social Security, and those 55 to 64 can too if AGI is $75,000 or less ($95,000 joint); otherwise Social Security shares the $20,000 cap. Any Social Security you subtract reduces your pension subtraction. Check your state's current rules for your income level.
Beyond income tax
Income tax isn't the whole bill. States without an income tax lean harder on property and sales taxes, and home insurance costs vary widely by region. Compare your total expected costs in each state you're considering, using current figures from the state's revenue department and your county.
Domicile matters too. To stop owing tax to your old state, you have to actually move: a new driver's license and voter registration, a home in the new state and most of your time spent there. States look at the whole picture.
Use the pension tax by state tool to see how your own pension, IRA withdrawals and Social Security would be taxed in each state. For lump sum values, use the main PensionMath calculator, and for IRA withdrawals after a rollover, the RMD calculator.