Thirteen states exempt retirement income from taxation

As people approach retirement, they often consider where to live based on tax policies. Many worry about how much of their retirement income will be taxed. Here’s a breakdown of states that do or do not tax retirement income. Nine states do not charge a state income tax. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire does tax interest and dividend income but plans to eliminate this tax in 2025. For retirees, four states specifically do not tax retirement income, including Illinois, Iowa, Mississippi, and Pennsylvania. This means that if you live in these states, your pension, retirement account withdrawals, and other retirement income will not be taxed. When it comes to Social Security benefits, 41 states and Washington, D.C. do not tax these benefits at all. If you receive Social Security, you may be happy to find your state on this list, such as California, Florida, or Texas. Conversely, nine states do tax Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. However, many retirees may end up paying little or no tax on their benefits due to income or age exemptions. In total, 13 states do not tax any retirement income, including Social Security, pensions, and withdrawal from retirement accounts: Alaska, Florida, Illinois, Iowa, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wyoming. It is essential to consider overall financial planning for retirement. A solid plan should include various income sources, such as pensions, Social Security, and savings to ensure a comfortable retirement.