Which U.S. States Do Not Tax Social Security: A Retiree's Tax Planning Guide

For millions of Americans, understanding how retirement income is taxed across different states can make a significant difference in your retirement nest egg. The question of which states do not tax social security and other retirement income is one that deserves careful attention during your financial planning years.

The good news: you have options. Whether you’re already receiving social security benefits, planning to withdraw from your 401(k), or counting on pension income, your state of residence can substantially impact your tax obligations. While federal income tax applies uniformly across the country, state-level rules vary dramatically—and some retirees can avoid state taxes entirely on their retirement income.

9 States With No Income Tax on Any Retirement Income

The simplest tax advantage comes from living in a state that doesn’t impose income tax at all. These nine states currently have no state income tax, which means your social security, retirement account distributions, and pension income all escape state-level taxation:

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

Living in one of these states automatically means you won’t owe state taxes on retirement withdrawals, regardless of how much you receive from social security or retirement accounts. This can represent thousands of dollars in annual tax savings for many retirees.

7 States That Offer Partial Tax Exemptions on Retirement Income

Beyond the nine states with zero income tax, an additional seven states have carved out specific exemptions for retirement income. These states recognize the unique needs of retirees and offer targeted tax breaks, though the details vary:

Arkansas provides an annual exemption of up to $6,000 from IRA distributions and pension plans for individuals age 59½ and older.

Illinois goes further, exempting all forms of retirement income from state taxation—including social security benefits, retirement account withdrawals, and pensions.

Iowa exempts social security benefits from state tax and allows residents age 55 and older to exclude distributions from retirement accounts and pensions.

Mississippi joins Illinois with a complete exemption on all retirement income, though early withdrawal penalties at the federal level still apply.

New Hampshire exempts social security benefits and pension income, though interest and dividends from traditional IRAs face taxation (a policy being phased out).

Pennsylvania provides the most generous exemption after Illinois, exempting all retirement income including social security, account distributions, and pensions.

South Carolina exempts social security benefits and allows tax deductions for retirement account and pension income—up to $3,000 annually for those under 65, and up to $10,000 for those 65 and older.

How Social Security Is Treated in States That Do Tax It

While 41 states and Washington, D.C. do not tax social security benefits, nine states maintain taxes on these payments: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia (which has been phasing out this tax since 2026).

However, the state tax picture is only part of the equation. Regardless of where you live, federal tax rules may still apply to your social security benefits. The IRS uses a calculation based on your “combined income” to determine taxation:

Combined income = Your Adjusted Gross Income (AGI) + Half of your annual social security benefits + Any nontaxable interest earned

For example, if you have an AGI of $20,000, receive $20,000 annually from social security, and earn $500 in nontaxable Treasury bond interest, your combined income totals $30,500 ($20,000 + $10,000 + $500).

The IRS then applies these thresholds to determine how much of your social security is potentially taxable:

Putting It All Together: Strategic Retirement Planning

The implications are substantial. A retiree in Florida receives an automatic state tax advantage simply by residing there, while a retiree in Colorado faces potential federal AND state taxes on social security. Meanwhile, someone in Illinois enjoys complete exemption from state taxation on all retirement income sources.

Understanding these differences empowers you to make informed decisions about where to retire and how to structure your retirement income streams. When combined with proper planning around your social security claiming strategy, pension distribution timing, and retirement account withdrawals, tax-efficient state selection can preserve tens of thousands of dollars throughout your retirement years.

The bottom line: states that do not tax social security and other retirement income exist across the country, but the specifics matter. Whether you’re already retired or approaching this life stage, consulting with a tax professional about your particular situation can help ensure you’re not leaving money on the table due to unnecessary tax obligations.