Does Your State Tax Your Retirement Income? The 2026 Map — and Why It Belongs in Your Plan

Picture two people with the exact same retirement: $75,000 a year, half from Social Security and half from a 401(k). One retires to Florida. The other stays put in a state that taxes retirement income. Same money, same life — but over a 30-year retirement, the difference in state taxes can run well into the tens of thousands of dollars.

Here's the strange part: almost nobody checks. People spend months optimizing their Social Security claim age and their investment mix, then move — or don't move — without ever asking what their state will do to the income they've spent forty years building. State taxes are the quiet variable in retirement planning, and because the rules differ wildly and change almost every year, the only way to know your number is to look it up and plug it in.

This is the 2026 map, what it means for your plan, and the handful of moves that turn this from an unpleasant surprise into a deliberate decision.

It's not one switch — it's three questions

The biggest misconception is that a state either "taxes retirement" or it doesn't. In reality, your state answers three separate questions, and it can answer them differently:

1. Does it tax your Social Security benefits?
2. Does it tax your pension income?
3. Does it tax withdrawals from your 401(k) and IRA?

A state can exempt your Social Security but tax every dollar you pull from your 401(k). Another can exempt pensions but not IRA withdrawals. Many layer on age tests (the break only applies after 65, or 59½, or 55) and income thresholds (the exemption phases out above a certain AGI). "Does my state tax retirement income?" almost always has a "it depends" answer — and the details are where the money is.

The nine states that tax none of it

The simplest case: nine states levy no broad income tax at all, so wages, pensions, 401(k) draws, IRA distributions, and Social Security are all free of state income tax:

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Two footnotes worth knowing: New Hampshire historically taxed interest and dividends, but that tax has been fully phased out (its last year was 2025), so as of 2026 retirement income is untouched. And Washington has no income tax but does levy a capital-gains tax that affects only high earners with large realized gains. For most retirees in these nine states, the state's cut of ordinary retirement income is zero.

But "no income tax" is not the same as "cheapest." These states still have to fund themselves, and they often do it through higher property and sales taxes. A retiree with a paid-off house in a low-property-tax state can come out ahead of someone in a no-income-tax state with steep property taxes. The income-tax line is one line on the bill, not the whole bill.

Social Security: only eight states still tax it

This is the fastest-improving corner of the map. The number of states taxing Social Security benefits has been shrinking for years as one state after another repeals or phases out the tax — West Virginia completed its phase-out for 2026, dropping the count by one. As of 2026, just eight states tax Social Security benefits, and every one of them carves out most retirees with income or age thresholds:

Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.

Even in these states, many residents owe nothing. Colorado lets people 65 and older deduct all of their federally taxed Social Security (it's on the list because it still taxes benefits for some residents under 65). New Mexico exempts benefits for single filers under $100,000 and joint filers under $150,000. Minnesota's exemption reaches into the mid-five-figures of income and is indexed each year. The pattern is the same everywhere: the tax, where it survives at all, increasingly falls only on higher-income retirees. If you live in one of the other 42 states (or D.C.), your Social Security is state-tax-free outright.

Pensions, 401(k)s and IRAs: the bigger, messier question

Social Security is the friendly part. Withdrawals from tax-deferred accounts — your 401(k), 403(b), and traditional IRA — are where states diverge most, because for many retirees that's the largest slice of income.

A handful of states give retirement income a full pass even though they have an income tax:

• Illinois doesn't tax Social Security, pensions, or 401(k)/IRA distributions.
• Mississippi exempts retirement income (you still pay its flat tax on other income above a threshold).
• Pennsylvania skips retirement income once you've reached the plan's qualifying age.
• Iowa exempts retirement income — but only for those 55 and older, so a 52-year-old early retiree there is still taxed.
• Michigan spent four years phasing out its retirement tax, and 2026 is the year the phase-in finishes — most pension, 401(k), and IRA income is now deductible (up to inflation-indexed caps).

Note the recurring trap in that list: age tests. Mississippi and Pennsylvania may treat a withdrawal taken before 59½ as ordinary income rather than exempt "retirement income," and Iowa's break doesn't start until 55. Early retirees are exactly the people most likely to assume an exemption applies and be wrong.

The remaining states tax retirement income fully or partially, often with their own deductions, credits, and age or income limits. The takeaway isn't to memorize 50 sets of rules — it's that your state's treatment of your 401(k) and IRA is specific to your state, your age, and your income, and you can't infer it from a headline. (We keep a plain-English page for every state with the effective rate, Social Security treatment, and the notable carve-outs.)

Why this belongs in the plan, not the footnotes

A few percentage points of state tax doesn't sound like much until you compound it across a three-decade retirement. State income tax applies every year, to a rising income base as required minimum distributions kick in, and it interacts with decisions you're already making:

Roth conversions. When you convert money from a traditional IRA to a Roth, you pay tax on the conversion in the year you do it — including state tax. Converting while you live in a no-income-tax state, or in a low-income gap year before a move, can be worth real money. Converting the same amount in a high-tax state in a high-income year is the opposite. The timing and location of conversions is a state-tax decision as much as a federal one.

Relocation. Moving for taxes is a legitimate strategy, but do the whole math: income tax and property tax and sales tax, plus the year-of-move mechanics (part-year residency, and where you're domiciled when a big conversion or pension lump-sum lands). There's also a useful federal protection most people don't know about: since 1996, federal law (4 U.S.C. § 114) bars a state you've moved away from taxing your retirement income — pensions, 401(k), and IRA distributions alike — so a former state can't reach back for "source tax." Only your new state of residence can tax that income, under its rules.

Withdrawal sequencing. Which accounts you draw from first changes your taxable income each year, and therefore your state tax — the same lever that drives your federal bracket and your Medicare IRMAA surcharges.

None of these are exotic. They're the ordinary decisions of a normal retirement — and your state quietly prices every one of them.

The honest way to find your number

You don't need to become a 50-state tax expert. You need to know your state's answer to the three questions and put it into your projection alongside everything else.

That's the case for running the actual numbers rather than reading a list. Yearfold's calculator runs your household across 10,000 simulated futures, and its Taxes tab lets you pick your state of residence in retirement and see a year-by-year after-tax forecast — 2026 federal brackets, the Social Security inclusion math, Medicare/IRMAA, and an estimate of your state's tax, flagging whether that state taxes Social Security. State rules are modeled as a flat effective-rate approximation rather than the full bracket-by-bracket code — enough to turn "does my state tax my retirement?" into a number in your plan instead of a surprise in April. (For more on why a single projected number is misleading and a probability isn't, see how the simulation works and Do you already have enough to retire?)

Two retirees with identical savings can have very different retirements depending on one line on a tax form. The good news is that it's a knowable line — and once you know it, it's a decision you get to make on purpose.

Run your plan with your state's taxes included — free, no account, no bank linking →

Sources and further reading

State tax rules change yearly, and a 50-state overview can't rest on a single primary source. These are the maintained guides and primary references behind the lists above; always confirm the specifics for your own state with its Department of Revenue before acting.

• Kiplinger: The 8 States That Tax Social Security Retirement Income in 2026 — kiplinger.com
• Kiplinger: State-by-State Guide to Taxes on Retirees — kiplinger.com
• Social Security Administration: Income Taxes and Your Social Security Benefit — ssa.gov
• U.S. Code: 4 U.S.C. § 114 — Limitation on State income taxation of certain pension income — uscode.house.gov
• Michigan Department of Treasury: Retirement and Pension Benefits — michigan.gov

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State tax rules change frequently and vary by individual circumstances. The lists and thresholds above are current for 2026 as of the last-reviewed date, but confirm your state's current rules with its Department of Revenue or a qualified tax professional before acting — this article is general education, not tax advice for your situation.