--- title: "Retirement Tax Guide by State (2026)" description: "How all 50 states + DC tax Social Security, pensions, and 401(k)/IRA withdrawals — and where retirement income goes furthest." lang: en json-ld: | [ { "@context": "https://schema.org", "@type": "WebSite", "name": "HECMAcademy", "url": "https://hecmacademy.com", "description": "Independent, plain-English reverse mortgage education for U.S. homeowners age 62 and older. 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Explains HECM eligibility, costs, protections, and payout options without sales pressure." }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://hecmacademy.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement Tax Guide", "item": "https://hecmacademy.com/retirement-tax-guide" } ] }, { "@context": "https://schema.org", "@type": "Article", "headline": "Retirement Tax Guide by State (2026)", "description": "State-by-state comparison of how the U.S. taxes Social Security, pensions, and retirement account withdrawals in 2026.", "author": { "@type": "Organization", "name": "HECMAcademy Now" }, "publisher": { "@type": "Organization", "name": "HECMAcademy Now" }, "datePublished": "2026-06-09", "mainEntityOfPage": "https://hecmacademy.com/retirement-tax-guide" } ] --- Free HECM guidance — no sales pressure Mon–Fri, 9am–6pm ET [Contact](/contact) [![HECMAcademy — reverse mortgage education](/__l5e/assets-v1/11c6d22b-7f84-4add-8068-34dad2c8a5b7/hecmacademy-logo.png)](/) [How it works](/#how) Learn [Free Guide](/guide)[FAQ](/faq)[Blog](/blog)[Retirement Tax Guide](/retirement-tax-guide)[Heirs Guide](/heirs-guide) By State [California](/reverse-mortgage/california)[Texas](/reverse-mortgage/texas)[Florida](/reverse-mortgage/florida)[Arizona](/reverse-mortgage/arizona)[Colorado](/reverse-mortgage/colorado)[Virginia](/reverse-mortgage/virginia)[Utah](/reverse-mortgage/utah)[Washington](/reverse-mortgage/washington)[Ohio](/reverse-mortgage/ohio)[Illinois](/reverse-mortgage/illinois)[Maryland](/reverse-mortgage/maryland)[North Carolina](/reverse-mortgage/north-carolina)[Oregon](/reverse-mortgage/oregon)[Hawaii](/reverse-mortgage/hawaii) [All states →](/reverse-mortgage) [Calculator](/calculator)[About](/about) [Expert advisor (888) 203-8887 Mon–Fri, 9am–6pm ET ](tel:+18882038887)[Check Eligibility](/#quickcheck) [](tel:+18882038887)[Check Eligibility](/#quickcheck) Retirement Planning Resource # Retirement Tax Guide by State (2026) A plain-English, state-by-state look at how the 50 U.S. states (plus Washington, D.C.) tax the three biggest sources of retirement income: **Social Security**, **pensions**, and withdrawals from **401(k), IRA, and 403(b)** accounts. Plus how your home equity — and tools like a reverse mortgage — fit into your overall tax picture. 9 States with no state income tax at all 41 States (plus D.C.) that do not tax Social Security 13 States that fully or effectively exempt retirement income ## States that do not tax retirement income A handful of states levy no income tax of any kind, which means Social Security, pension checks, and IRA/401(k) distributions all arrive untouched at the state level. Two additional states — Illinois, Mississippi, and Pennsylvania — do have a state income tax but specifically exempt most retirement income. Alaska Florida Nevada New Hampshire South Dakota Tennessee Texas Washington Wyoming Illinois (exempts retirement income) Mississippi (exempts retirement income) Pennsylvania (exempts retirement income) ## Social Security taxation, by state The vast majority of states leave Social Security benefits alone. Only a small number tax them in full or in part — and several of those are phasing the tax out entirely. Do _not_ tax Social Security Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming, D.C.. Tax Social Security (in full or in part) Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, West Virginia. Most apply income-based exemptions; West Virginia is phasing the tax to zero by 2026. ## Full state-by-state table The table below shows the top state income-tax bracket, how Social Security is treated, and the general rules for pensions and retirement-account withdrawals. Rules change — always confirm with a CPA or your state revenue agency before relocating. State Income tax Social Security Pensions 401(k) / IRA Alabama 2%–5% Not taxed Most public/private pensions exempt Taxed as ordinary income; first $6,000 of distributions from defined-contribution plans exempt (age 65+) Alaska No state income tax. None Not taxed Not taxed Not taxed Arizona 2.5% flat Not taxed Taxed; limited federal/military exemption Taxed as ordinary income Arkansas 0%–3.9% Not taxed First $6,000 exempt First $6,000 exempt California High overall income-tax burden for retirees. 1%–13.3% Not taxed Fully taxed Fully taxed Colorado 4.4% flat Partially taxed Up to $24,000 retirement-income exemption (age 65+) Up to $24,000 exemption (age 65+) Connecticut 2%–6.99% Partially taxed Phased exemptions based on AGI Phased exemptions based on AGI Delaware 2.2%–6.6% Not taxed Up to $12,500 exclusion (age 60+) Up to $12,500 exclusion (age 60+) Florida No state income tax; no estate or inheritance tax. None Not taxed Not taxed Not taxed Georgia 5.39% flat Not taxed Up to $65,000 retirement exclusion (age 65+) Same exclusion applies Hawaii 1.4%–11% Not taxed Employer-funded pensions exempt Employee-funded portions taxed Idaho 5.8% flat Not taxed Limited exemption for certain public pensions Fully taxed Illinois One of the most retirement-tax-friendly states for income; high property tax. 4.95% flat Not taxed Not taxed Not taxed Indiana 3.05% flat Not taxed Mostly taxed; military pensions exempt Fully taxed Iowa 3.8% flat Not taxed Not taxed (age 55+) Not taxed (age 55+) Kansas 3.1%–5.7% Not taxed Public pensions exempt; private taxed Fully taxed Kentucky 4% flat Not taxed Up to $31,110 exclusion Up to $31,110 exclusion Louisiana 1.85%–4.25% Not taxed Most public pensions exempt; up to $6,000 private exclusion (age 65+) $6,000 exclusion (age 65+) Maine 5.8%–7.15% Not taxed Up to $45,864 pension exclusion (2025) Same exclusion Maryland 2%–5.75% Not taxed Up to $39,500 pension exclusion (age 65+) Same exclusion Massachusetts 5% flat (9% on >$1M) Not taxed Government pensions exempt; private taxed Fully taxed Michigan 4.25% flat Not taxed Being phased to fully exempt by 2026 Phased exemption increasing through 2026 Minnesota 5.35%–9.85% Partially taxed Limited exemptions by AGI Fully taxed Mississippi Among the most retirement-tax-friendly. 4.7% flat Not taxed Not taxed Not taxed (qualified plans) Missouri 2%–4.7% Not taxed Public pension exemption; private up to $6,000 Up to $6,000 exemption based on AGI Montana 4.7%–5.9% Taxed Fully taxed Fully taxed Nebraska 2.46%–5.84% Not taxed Fully taxed Fully taxed Nevada No state income tax; no estate tax. None Not taxed Not taxed Not taxed New Hampshire Interest & dividends tax fully repealed in 2025. None on wages/retirement Not taxed Not taxed Not taxed New Jersey 1.4%–10.75% Not taxed Up to $100,000 retirement exclusion (married, age 62+) when income < $150K Same exclusion applies New Mexico 1.7%–5.9% Partially taxed Up to $8,000 exemption (age 65+) Up to $8,000 exemption New York 4%–10.9% Not taxed Government pensions exempt; private up to $20,000 exclusion (age 59½+) Up to $20,000 exclusion North Carolina 4.5% flat Not taxed Fully taxed (Bailey settlement exemption for certain pre-1989 service) Fully taxed North Dakota 1.95%–2.5% Not taxed Fully taxed Fully taxed Ohio 2.75%–3.5% Not taxed Retirement income credit up to $200 Same credit applies Oklahoma 0.25%–4.75% Not taxed Up to $10,000 exclusion Up to $10,000 exclusion Oregon 4.75%–9.9% Not taxed Federal pensions partially exempt; state credit available Fully taxed Pennsylvania Among the most retirement-tax-friendly. 3.07% flat Not taxed Not taxed (after age 59½) Not taxed (qualified plans, after age 59½) Rhode Island 3.75%–5.99% Partially taxed Up to $20,000 exemption based on AGI Up to $20,000 exemption South Carolina 0%–6.2% Not taxed $10,000 retirement deduction (under 65); $15,000 (age 65+) Same deduction South Dakota None Not taxed Not taxed Not taxed Tennessee Hall income tax repealed. None Not taxed Not taxed Not taxed Texas High property tax offsets income-tax savings. None Not taxed Not taxed Not taxed Utah 4.55% flat Partially taxed Retirement credit up to $450 Same credit Vermont 3.35%–8.75% Partially taxed Limited exemptions Fully taxed Virginia 2%–5.75% Not taxed Up to $12,000 age deduction (age 65+, income-based) Same deduction Washington 7% capital gains tax on gains >$262K. None on wages/retirement Not taxed Not taxed Not taxed West Virginia Social Security tax being phased out (fully exempt by 2026). 2.36%–5.12% Partially taxed Limited exemptions for public service Limited exemptions Wisconsin 3.5%–7.65% Not taxed Fully taxed; $5,000 exclusion (age 65+, income-based) $5,000 exclusion Wyoming None Not taxed Not taxed Not taxed D.C. 4%–10.75% Not taxed Fully taxed Fully taxed ## The 10 most tax-friendly states for retirees Combining no income tax (or full retirement-income exemptions) with moderate property and sales tax, these states consistently rank at the top for retirees in 2026: 1. **Florida** — no income tax, no estate tax, retirement-friendly homestead protections. 2. **Tennessee** — no income tax, low property tax, moderate sales tax. 3. **Wyoming** — no income tax and among the lowest overall tax burdens in the country. 4. **Nevada** — no income tax; sales tax is moderate but property tax is low. 5. **Mississippi** — exempts Social Security, pensions, and qualified retirement withdrawals. 6. **Pennsylvania** — exempts Social Security, pensions, and qualified retirement withdrawals after age 59½. 7. **Alabama** — Social Security and most pensions are exempt; low cost of living. 8. **South Dakota** — no income tax, low overall tax burden. 9. **Alaska** — no income tax and an annual Permanent Fund Dividend. 10. **Georgia** — up to $65,000 retirement-income exclusion for residents 65+. ## Don't forget property tax, sales tax, and estate tax Income tax is only part of the picture. Several "no income tax" states (Texas, New Hampshire) have above-average property taxes. A handful of states still levy **estate or inheritance taxes** at relatively low thresholds — including Massachusetts, Oregon, Washington, Maryland, and New Jersey. When comparing locations, look at the _combined_ tax burden: income + property + sales + estate/inheritance. ## How home equity fits into your retirement tax picture For most U.S. homeowners 62+, the largest single asset is the home itself — and how you access that equity has direct tax consequences. A few rules of thumb: - **Selling and downsizing** can trigger capital gains above the $250K / $500K exclusion, plus state capital-gains tax in states like Washington. - **Withdrawing from a traditional 401(k) or IRA** is taxed as ordinary income at both federal and (in most states) state level — and can push you into a higher Medicare IRMAA bracket. - **Reverse mortgage proceeds** (HECM or jumbo proprietary) are loan advances, not income. They are generally **not taxable** at the federal level, do not count as income for most state purposes, and typically do not affect Social Security or Medicare eligibility. That tax treatment is one reason many financial planners use a reverse mortgage as a "buffer asset" — drawing from home equity in down-market years instead of selling investments at a loss or triggering an unnecessary tax bill. ## Want to see how your home equity fits into your retirement plan? HECMAcademy Now specializes in HECM and jumbo proprietary reverse mortgage refinancing for homeowners 55+ (62+ for HECM). We'll walk you through the numbers — including how tax-free loan proceeds compare to taxable IRA or pension withdrawals in your state. [Explore reverse mortgage refinancing](/)[Talk to a specialist](/#prequal) **Disclaimer.** This guide is for general educational purposes and reflects state tax rules as of 2026. Tax law changes frequently and individual circumstances vary. Consult a licensed tax professional or your state department of revenue before making retirement or relocation decisions. HECMAcademy Now does not provide tax or legal advice. Reviewed by the HECMAcademy Editorial Team · Last updated June 2026 · [How we vet this content](/about#editorial-standards) ## Get the Free HECM Guide (PDF) An 8-page plain-English guide to how the FHA HECM works — sent straight to your inbox. Company website First nameLast name EmailPhoneZIP code Age range 55-6162-6970-7980+ I agree to receive calls and texts from HECM Academy about reverse mortgages. Not required to get the guide. Reply STOP to opt out. Send Me the Guide We never sell your information. [Privacy policy](/privacy-policy). HECMAcademy is not a lender. This is educational information only. By submitting, you agree to receive our free HECM educational guide and follow-up emails. Unsubscribe anytime. Talk to a HUD-approved counselor Free, independent, and required before any HECM. 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