17 States That Don’t Tax Social Security or Pensions

Retiring in a state that doesn’t tax your Social Security benefits or pension income can make a significant difference in how far your retirement savings stretch. While federal taxes still apply, several U.S. states offer tax structures that are especially favorable to retirees—some exempting Social Security, pensions, and retirement account withdrawals entirely from state income tax. Below is a clear, reader-friendly guide to states that make retirement income go further, what they exempt, and why retirees often find them attractive.

Arkansas

Arkansas excludes Social Security benefits from state income tax and provides a retirement income exemption that reduces taxable pension and retirement-account withdrawals by up to $6,000. That simplification helps retirees retain more of their monthly income for everyday expenses, travel, and home projects.

Illinois

Illinois is highly favorable for retirees because it does not tax Social Security, traditional pension income, 401(k) distributions, or IRA withdrawals. With these common retirement income sources excluded, retirees can keep more of their savings for lifestyle and long-term plans.

Iowa

Iowa no longer taxes Social Security benefits and offers a retirement income exclusion for other retirement withdrawals: up to $6,000 for single filers and $12,000 for married couples filing jointly. These exclusions help offset living costs and support retirees who want to preserve savings for the future.

Mississippi

Mississippi exempts Social Security, pension income, and withdrawals from 401(k)s and IRAs from state income tax. With few restrictions or income-phaseouts, retirees benefit from clearer, simpler taxation and often lower overall costs of living.

New Hampshire

New Hampshire has no broad state income tax and currently does not tax Social Security. The state is phasing out its tax on interest and dividend income by 2027, which further protects retirement assets that generate investment income and makes the state appealing for retirees focused on preserving their savings.

Pennsylvania

Pennsylvania does not tax Social Security, pension income, or distributions from many retirement accounts. This favorable tax treatment means retirees can allocate more funds to travel, healthcare, and family while minimizing the state tax bite on retirement income.

South Carolina

South Carolina excludes Social Security from state income tax and provides additional retirement income deductions. Retirees younger than 65 can claim a $3,000 deduction, while those 65 and older receive a larger $10,000 deduction, reducing taxable income and providing practical relief for retirees on fixed budgets.

Alabama

Alabama exempts Social Security and pension income from state taxes, which benefits recipients of public and private pensions. However, distributions from 401(k)s and IRAs may still be taxable at the state level, so retirees should plan accordingly.

Alaska

Alaska has no state income tax, and many retirement income types—including Social Security and retirement account withdrawals—are not subject to state income tax. The state also has no statewide sales tax and provides the Permanent Fund Dividend to eligible residents, factors that can enhance retirees’ overall financial position.

Florida

Florida’s lack of a state income tax means Social Security, pensions, 401(k) and IRA withdrawals are generally free from state taxation. The state also does not impose estate or inheritance taxes, which helps retirees protect assets they intend to pass on to heirs.

Hawaii

Hawaii excludes Social Security and many public pensions from state taxation, though private retirement account distributions may still be taxed. The exemptions can help offset Hawaii’s higher cost of living for retirees who receive public pension benefits or Social Security.

Nevada

Nevada’s absence of a state income tax means Social Security, pensions, and distributions from retirement accounts are not subject to state income tax. The state also does not impose estate or inheritance taxes, which together make it a popular choice for retirees seeking tax simplicity.

South Dakota

South Dakota has no state income tax, so Social Security, pensions, and retirement-account distributions remain untaxed at the state level. With no estate or inheritance taxes, retirees can plan long term with fewer concerns about state-level deductions on their income or legacy.

Tennessee

Tennessee eliminated its tax on interest and dividend income and does not impose a broad state income tax. As a result, Social Security and many retirement withdrawals are not taxed at the state level, helping retirees keep more of their income while enjoying local amenities.

Texas

Texas has no state income tax, which generally spares Social Security and retirement-account withdrawals from state taxation. The state’s lack of estate or inheritance taxes can further preserve wealth for heirs, and relatively affordable living in many areas draws retirees seeking financial breathing room.

West Virginia (New for 2026!)

West Virginia is updating its tax rules to become more retiree-friendly by fully eliminating state taxation of Social Security benefits in 2026. Pension income in the state already receives favorable treatment, making West Virginia an increasingly attractive option for retirees seeking reduced state tax burdens.

Wyoming

Wyoming’s absence of a state income tax leaves Social Security, pensions, and retirement-account withdrawals untouched by state income taxation. Coupled with generally low property taxes and spacious, low-density living, Wyoming is appealing for retirees seeking both tax advantages and a quieter lifestyle.

Choosing a retirement destination involves weighing taxes alongside housing costs, healthcare availability, climate, family ties, and lifestyle preferences. While the states listed here offer significant tax advantages for many retirees, individual circumstances vary—so it’s wise to consult a tax professional or financial planner to understand how state rules apply to your specific retirement income mix and long-term goals.