Ahh, retirement. We all work towards it, decade after decade. Life goes by in the pursuit of retiring eventually, and although nearly everyone looks forward to being able to retire, proper planning and responsible lifestyle choices can be fundamental aspects of how comfortable you can be when the time comes.
One of the most impactful things that someone can do in preparation for retirement is deciding where to live. And no, not necessarily for the views of nature, golf courses, and access to boat launches (although all of these can be a very positive addition), but for, you guessed it, the statewide taxation of your retirement income!
One of the first metrics to look for in finding states that wouldn’t tax your retirement income is whether a state taxes ordinary income, since pre-tax retirement accounts such as Traditional IRAs, 401(k)s, 403(b)s, SEP, SIMPLE, and 457(b)s are classified as ordinary income when you withdraw from them. The following states do not tax ordinary income:
- Alaska
- Florida
- Nevada
- New Hampshire
- Tennessee
- Texas
- South Dakota
- Washington
- Wyoming
Another set of states to investigate are those that do have an ordinary income tax, but do not tax most retirement incomes. These are as follows:
- Pennsylvania
- Illinois
- Mississippi
- Iowa
- Michigan
Some states also offer partial exemptions or deductions for your retirement income, and these will vary state-to-state and will have different amounts that can be exempted or deducted on your tax return. It is also noteworthy that as of 2026, 42 states do not tax Social Security whatsoever, and many that do have income thresholds that exempt lower and middle earners from taxation.
Overall, choosing which state to retire in can make a sizable difference in how your retirement income is taxed. Meeting with a qualified financial planner who can observe the whole of someone’s retirement picture and create a tax projection is the best way to know if a move to a more tax-advantageous state is right for you.