10 U.S. States Where Taxes on Pensions and Social Security Are 0%

Retirement planning often comes down to a handful of numbers: how much you’ve saved, what your monthly Social Security check looks like, and how far your pension will stretch. One factor that gets overlooked until tax season arrives is where you actually live. State tax rules on retirement income vary so widely that two retirees with identical pensions and identical Social Security benefits can end up with very different amounts of spending money, simply because one lives across a state line from the other.

Some states have decided to make this calculation simple by taking themselves out of the equation entirely. Whether through a broad refusal to tax any personal income or through targeted exemptions carved out specifically for retirees, these ten states let pension checks and Social Security deposits land without a state tax bill attached. Here’s a closer look at each one and why it made the list.

1. Alaska

Alaska sits at the top of most retirement tax lists for a simple reason: it has no state income tax of any kind. Because Alaska doesn’t have an income tax, residents won’t pay taxes on their pension or other income. That single fact covers pensions, Social Security, 401(k) withdrawals, and IRA distributions without any special carve-out required.

What makes Alaska unusual among the no-tax states is that it also lacks a statewide sales tax, though local municipalities can levy their own. Retirees who choose Alaska are often drawn by the absence of state taxation as much as by the lifestyle, since the state also distributes an annual dividend to residents through its Permanent Fund. For retirees on a fixed income, that combination of no income tax and a modest yearly payout is a rare structural advantage.

2. Florida

Florida remains one of the most popular retirement destinations in the country, and its tax structure is a big part of the appeal. Like Alaska, Florida doesn’t have an income tax, so pension income is not taxed. Social Security benefits, 401(k) withdrawals, and IRA distributions all avoid state taxation for the same reason.

The absence of an income tax has held steady in Florida for decades, and there’s no legislative movement suggesting that will change. Property taxes and insurance costs, particularly for homeowners near the coast, can offset some of the savings, so it’s worth weighing the full cost of living rather than focusing on income tax alone. Still, for retirees relying heavily on Social Security and a pension, Florida’s approach keeps things straightforward.

3. Nevada

Nevada is another state built around the idea of collecting revenue through means other than personal income tax. Tourism, gaming, and sales tax dollars fund the state budget, which means retirees never see a state tax line item on their pension or Social Security statements. This applies uniformly, without income limits, age requirements, or phase-in schedules to track.

Because Nevada has no income tax structure at all, there’s also no need to file a state return purely for retirement income purposes. That administrative simplicity, on top of the tax savings, is part of why the state continues to attract retirees from neighboring California and Arizona. Sales tax rates in Nevada run a bit higher than the national average, so it’s a trade-off worth factoring into a full retirement budget.

4. New Hampshire

New Hampshire has long been known for having no tax on wages, but it used to tax interest and dividend income, which created some confusion for retirees living off investment income. New Hampshire has no state income tax on wages, salaries, retirement account withdrawals or pension payments, and while it historically taxed dividends and interest, it stopped taxing those sources in 2025. That change effectively made the state fully income-tax-free going into 2026.

For retirees whose income comes primarily from pensions and Social Security rather than investment portfolios, this shift matters less directly, since those income types were already untaxed. But it does simplify tax filing for anyone with a mix of retirement income sources. New Hampshire also has no state sales tax, which adds another layer of savings that pairs well with its income tax policy.

5. South Dakota

South Dakota keeps its tax approach simple by not levying a state income tax at all. There are no income taxes in the state of South Dakota, so pensions are not taxed. The same logic extends to Social Security benefits and any withdrawals from retirement accounts.

South Dakota also has no estate tax or inheritance tax, which appeals to retirees thinking about what they’ll eventually pass on to heirs. The state’s relatively low cost of living compared to coastal states adds to its reputation as a quietly tax-friendly place to retire. It doesn’t get the attention that Florida or Nevada does, but the numbers work out similarly for anyone drawing a pension or Social Security check.

6. Tennessee

Tennessee eliminated its narrow tax on interest and dividend income back in 2021, and since then it has had no state income tax whatsoever. Retirees in Tennessee don’t pay tax on their pension income because there’s no income tax in the state, and they also don’t pay state income tax on Social Security retirement benefits. The same applies to 401(k) and IRA distributions.

Tennessee’s move away from taxing investment income was gradual, phased in over several years before reaching zero. That history is worth knowing because it shows the direction some states are heading, even if Tennessee has already arrived. Combined with a relatively low cost of living in much of the state outside Nashville, it’s become a common landing spot for retirees relocating from higher-tax states in the Northeast and Midwest.

7. Texas

Texas has never had a personal income tax, and that has made it one of the most consistent entries on every list of tax-friendly retirement states. Pensions, Social Security, and retirement account withdrawals all pass through untouched by state taxation. There’s no age threshold, income cap, or filing requirement tied to retirement income specifically, since the exemption is really just the absence of any income tax structure.

The trade-off in Texas tends to show up in property taxes, which run higher than the national average in many counties to make up for the lack of income tax revenue. Retirees who own homes should factor that into their overall math rather than assuming a tax-free income stream translates into an overall low tax burden. Renters, by contrast, often see the fuller benefit of the state’s approach.

8. Washington

Washington rounds out the group of states with no broad personal income tax, which means pensions and Social Security benefits are exempt by default. There is one nuance worth flagging for higher-net-worth retirees. Washington levies a 7% capital gains tax on gains exceeding $270,000, but this does not apply to retirement account distributions.

That capital gains tax was introduced in recent years and applies to a narrow slice of investment gains outside of retirement accounts, so most retirees living on pensions and Social Security will never encounter it. For everyday retirement income, Washington functions the same way as Texas or Florida: no state income tax touches the money at all. The state does have a relatively high sales tax, which is how it funds public services in the absence of an income tax.

9. Wyoming

Wyoming has no personal income tax and no plans to introduce one, making it one of the most tax-friendly states in the country for retirees. Pension income, Social Security benefits, and distributions from 401(k) or IRA accounts all arrive without a state tax obligation attached. The state’s revenue comes largely from mineral extraction taxes, which allows it to skip income taxation altogether.

Wyoming also has no estate or inheritance tax, adding another layer of appeal for retirees thinking about long-term financial planning. Its low population density and rural character aren’t for everyone, but for those drawn to the lifestyle, the tax picture is about as clean as it gets. There’s no distinction made between public and private pensions, or between different types of retirement accounts, since none of it is taxed in the first place.

10. Illinois

Illinois stands out on this list because, unlike the other nine entries, it does tax wages and general income. What makes it different is a specific and long-standing carve-out for retirement income. Illinois exempts all retirement income despite a 4.95% flat rate on wages. That exemption covers pensions, Social Security benefits, and withdrawals from qualified retirement accounts, all without an age or income limit attached.

Illinois has a flat income tax of 4.95% but retirement income is exempt, which means a retiree living entirely off a pension and Social Security in Illinois can end up with a state tax bill of zero, even though the same state taxes a working resident’s paycheck. This structure has remained stable for years and isn’t currently facing serious legislative threat. For retirees who want to stay in the Midwest without paying state tax on retirement income, Illinois offers a rare combination: a state with an income tax overall, but a genuine 0% rate on the two income sources that matter most in retirement.

Choosing where to retire involves far more than a single tax line item, but for anyone relying heavily on a pension and Social Security, these ten states remove one of the more predictable annual costs from the picture. Nine of them accomplish this simply by not taxing income at all, while Illinois does it through a targeted exemption that leaves its broader income tax structure intact. Property taxes, sales taxes, and the overall cost of living still deserve equal attention before making a move, since a 0% rate on retirement income doesn’t automatically mean a lower total tax burden. Still, for retirees doing the math on where their pension and Social Security checks will stretch furthest, this group of states offers a genuine and verifiable starting point.