States That Don’t Tax Pensions

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Table

Introduction

A pension is a type of fund that an employee makes payments toward, from a portion of their earned income, while being employed by that particular company they’re working for. In short, a pension fund is a way for people to save money so that after they retire, they’ll have a sum of money to live on. 

After retirement, a person’s pension will pay them out a predetermined allotment of money every month until that person dies. The quantity of money that accrues in your pension is determined by a few factors, such how many years you worked and how high your salary was during those years. Generally speaking, the longer a person works and the higher they’re paid, the larger their pension will be when they eventually retire. 

Depending on which state a person lives in, their pension might or might not be taxed to varying degrees. A little more than half of the states within the U.S. tax at least some of their constituent’s pensions. Often, however, states that only partially tax a person’s pension have limits in place regarding how much of the pension can be taxed. As an example, the state of Iowa lets joint filers who are older than 55 years of age exclude $12,000 from being taxed. 

Learn more about states that don’t tax pensions by browsing the data in the charts.

StateTax on PensionsIncome Tax RateTax on Social SecurityMilitary Retirement Tax Status
AlabamaNo2%No No Tax
AlaskaNo0%No No Tax
FloridaNo0%No No Tax
HawaiiNo1.4%No No Tax
IllinoisNo4.95%No No Tax
MississippiNo4%No No Tax
NevadaNo0%No No Tax
New HampshireNo5%No No Tax
PennsylvaniaNo3.07%No No Tax
South DakotaNo0%No No Tax
TennesseeNo0%No No Tax
TexasNo0%No No Tax
WashingtonNo7%No No Tax
WyomingNo0%No No Tax
ArizonaYes2.59%No No Tax
ArkansasYes2%No No Tax
CaliforniaYes1%No Fully Tax
ColoradoYes4.55%Yes Partial Exemptions
ConnecticutYes3%Yes No Tax
DelawareYes2.2%No Partial Exemptions
GeorgiaYes1%No Partial Exemptions
IdahoYes1%No Partial Exemptions
IndianaYes3.23%No No Tax
IowaYes0.33%No No Tax
KansasYes3.1%Yes No Tax
KentuckyYes5%No Partial Exemptions
LouisianaYes1.85%No No Tax
MaineYes5.8%No No Tax
MarylandYes2%No Partial Exemptions
MassachusettsYes5%No No Tax
MichiganYes4.25%No No Tax
MinnesotaYes5.35%Yes No Tax
MissouriYes1.5%No No Tax
MontanaYes1%Yes Partial Exemptions
NebraskaYes2.46%Yes No Tax
New JerseyYes1.4%No No Tax
New MexicoYes1.7%Yes Partial Exemptions
New YorkYes4%No No Tax
North CarolinaYes4.99%No No Tax
North DakotaYes1.1%Yes No Tax
OhioYes2.77%No No Tax
OklahomaYes0.25%No Partial Exemptions
OregonYes4.75%No Partial Exemptions
Rhode IslandYes3.75%Yes Partial Exemptions
South CarolinaYes0%No Partial Exemptions
UtahYes4.95%Yes No Tax
VermontYes3.35%Yes Fully Tax
VirginiaYes2%No Fully Tax
West VirginiaYes3%Yes No Tax
WisconsinYes3.54%No No Tax

Tax on Pensions by State

Alabama

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Tax on Pensions

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No

Ranked in the US

#28

Income Tax Rate

Alaska

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Tax on Pensions

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No

Ranked in the US

#44

Income Tax Rate

Arizona

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Tax on Pensions

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Yes

Ranked in the US

#25

Income Tax Rate

Arkansas

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Tax on Pensions

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Yes

Ranked in the US

#29

Income Tax Rate

California

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Tax on Pensions

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Yes

Ranked in the US

#38

Income Tax Rate

Colorado

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Tax on Pensions

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Yes

Ranked in the US

#11

Partial Exemptions

Income Tax Rate

Connecticut

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Tax on Pensions

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Yes

Ranked in the US

#22

Income Tax Rate

Delaware

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Tax on Pensions

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Yes

Ranked in the US

#27

Partial Exemptions

Income Tax Rate

Florida

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Tax on Pensions

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No

Ranked in the US

#45

Income Tax Rate

Georgia

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Tax on Pensions

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Yes

Ranked in the US

#39

Partial Exemptions

Income Tax Rate

Hawaii

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Tax on Pensions

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No

Ranked in the US

#35

Income Tax Rate

Idaho

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Tax on Pensions

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Yes

Ranked in the US

#40

Partial Exemptions

Income Tax Rate

Illinois

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Tax on Pensions

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No

Ranked in the US

#8

Income Tax Rate

Indiana

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Tax on Pensions

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Yes

Ranked in the US

#19

Income Tax Rate

Iowa

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Tax on Pensions

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Yes

Ranked in the US

#42

Income Tax Rate

Kansas

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Tax on Pensions

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Yes

Ranked in the US

#20

Income Tax Rate

Kentucky

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Tax on Pensions

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Yes

Ranked in the US

#4

Partial Exemptions

Income Tax Rate

Louisiana

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Tax on Pensions

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Yes

Ranked in the US

#32

Income Tax Rate

Maine

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Tax on Pensions

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Yes

Ranked in the US

#2

Income Tax Rate

Maryland

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Tax on Pensions

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Yes

Ranked in the US

#30

Partial Exemptions

Income Tax Rate

Massachusetts

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Tax on Pensions

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Yes

Ranked in the US

#5

Income Tax Rate

Michigan

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Tax on Pensions

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Yes

Ranked in the US

#12

Income Tax Rate

Minnesota

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Tax on Pensions

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Yes

Ranked in the US

#3

Income Tax Rate

Mississippi

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Tax on Pensions

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No

Ranked in the US

#14

Income Tax Rate

Missouri

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Tax on Pensions

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Yes

Ranked in the US

#34

Income Tax Rate

Montana

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Tax on Pensions

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Yes

Ranked in the US

#41

Partial Exemptions

Income Tax Rate

Nebraska

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Tax on Pensions

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Yes

Ranked in the US

#26

Income Tax Rate

Nevada

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Tax on Pensions

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No

Ranked in the US

#46

Income Tax Rate

New Hampshire

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Tax on Pensions

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No

Ranked in the US

#6

Income Tax Rate

New Jersey

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Tax on Pensions

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Yes

Ranked in the US

#36

Income Tax Rate

New Mexico

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Tax on Pensions

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Yes

Ranked in the US

#33

Partial Exemptions

Income Tax Rate

New York

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Tax on Pensions

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Yes

Ranked in the US

#15

Income Tax Rate

North Carolina

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Tax on Pensions

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Yes

Ranked in the US

#7

Income Tax Rate

North Dakota

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Tax on Pensions

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Yes

Ranked in the US

#37

Income Tax Rate

Ohio

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Tax on Pensions

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Yes

Ranked in the US

#24

Income Tax Rate

Oklahoma

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Tax on Pensions

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Yes

Ranked in the US

#43

Partial Exemptions

Income Tax Rate

Oregon

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Tax on Pensions

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Yes

Ranked in the US

#10

Partial Exemptions

Income Tax Rate

Pennsylvania

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Tax on Pensions

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No

Ranked in the US

#21

Income Tax Rate

Rhode Island

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Tax on Pensions

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Yes

Ranked in the US

#16

Partial Exemptions

Income Tax Rate

South Carolina

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Tax on Pensions

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Yes

Ranked in the US

#47

Partial Exemptions

Income Tax Rate

South Dakota

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Tax on Pensions

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No

Ranked in the US

#48

Income Tax Rate

Tennessee

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Tax on Pensions

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No

Ranked in the US

#49

Income Tax Rate

Texas

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Tax on Pensions

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No

Ranked in the US

#50

Income Tax Rate

Utah

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Tax on Pensions

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Yes

Ranked in the US

#9

Income Tax Rate

Vermont

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Tax on Pensions

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Yes

Ranked in the US

#18

Income Tax Rate

Virginia

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Tax on Pensions

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Yes

Ranked in the US

#31

Income Tax Rate

Washington

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Tax on Pensions

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No

Ranked in the US

#1

Income Tax Rate

West Virginia

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Tax on Pensions

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Yes

Ranked in the US

#23

Income Tax Rate

Wisconsin

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Tax on Pensions

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Yes

Ranked in the US

#17

Income Tax Rate

Wyoming

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Tax on Pensions

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No

Ranked in the US

#51

Income Tax Rate

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