11 States That Won’t Tax Your Social Security or Pension

It must be refreshing to retire where state taxes do not touch your hard-earned Social Security benefits and pension income. This allows you to enjoy the fruits of your labor fully. Federal taxes are a given but several states across the U.S. offer a tax-friendly environment for retirees, even exempting some, if not all, of their incomes from state taxation. So, which states are these, and what do they offer?

Arkansas

Retirees in Arkansas keep more of their money where it belongs—in their wallets. Social Security checks are tax-free, and pensioners get a break with up to $6,000 of their retirement income exempt. This means fewer deductions and more spending power for everything from road trips to home improvements. It keeps it simple: earn, withdraw, and enjoy—without extra state tax.

Illinois

Illinois retirees get a major tax advantage. Social Security, 401(k) withdrawals, IRA distributions, and pensions are all free from state taxation. No one touches every dollar from the retirement account. Unlike other states with partial exemptions, Land of Lincoln skips the tax bill altogether. More money in the bank means better travel, hobbies, and fun. Your budget will thank you if you retire here.

Iowa

For years, Iowa taxed retirement income but not anymore. Social Security benefits are exempt, and there's a generous exclusion for pension and retirement account withdrawals—$6,000 for individuals, and $12,000 for married couples. Whether it's investing, spending, or saving, Iowa ensures retirees keep more. A state that puts retirement income back in retirees' hands? That's a tax break worth celebrating.

Mississippi

The Magnolia State treats retirees right. Social Security, pensions, 401(k)s, and IRA distributions are all tax-free. There are no hoops, no limits, and no fine print. Every retirement dollar goes further, making it one of the most retiree-friendly states in the country. With warm weather and low living costs, it's a great place to stretch your savings without worrying about state taxes.

New Hampshire

No state income tax in New Hampshire means no problem. It skips Social Security taxation and is phasing out taxes on interest and dividends by 2027. That means retirement savings stay intact, allowing more freedom to travel, invest, or relax. Keeping money in retirees' pockets is a priority here, making it a smart pick for those avoiding tax deductions.

Pennsylvania

Keystone State retirees cash in on some of the best tax breaks in the country. The state does not tax Social Security, 401(k), IRA withdrawals, and pension income. Every dollar earned and saved stays where it belongs. Retirees get the freedom to spend more on leisure, family, or long-overdue bucket list adventures without watching their income shrink.

South Carolina

This Southern state doesn't tax Social Security and offers big breaks on other retirement income. Retirees under 65 can deduct $3,000 from taxable income, while those 65 and older enjoy a $10,000 deduction. That means fewer tax headaches and more flexibility for travel, home improvements, or spoiling the grandkids. South Carolina keeps things retiree-friendly without chipping away at savings.

Alabama

Alabama rewards retirees by keeping Social Security and pension income tax-free. Public pensions, private pensions—it doesn't matter; they're all exempt. The only catch is that 401(k) and IRA withdrawals still face state taxation. Still, with lower living costs and no Social Security tax, it offers a great deal for retirees looking to make the most of their nest eggs.

Alaska

Cold weather in Alaska doesn't thaw its warm financial benefits. No state income tax means every Social Security check, 401(k) withdrawal, and pension dollar stays in seniors' pockets. Add in no sales tax, and it's clear why financially savvy retirees consider Alaska. Whether settling in or cashing in on the Permanent Fund Dividend, retirement money goes further here than in most states.

Florida

Sunshine and tax savings make Florida a pensioner magnet. Bigger budgets for beaches, golf, and leisure exist due to the absence of income tax on Social Security, pension, 401(k), and IRA withdrawals. Florida's financial perks don't stop there—exemptions on estate or inheritance taxes mean retirees can pass on more wealth without the government taking a slice.

Hawaii

Retirement in paradise comes with tax perks. Social Security and public pensions are state tax-free, though 401(k) and IRA withdrawals still get taxed. While Hawaii isn't the cheapest place to live, retirees benefit from these exemptions, helping offset the high cost of paradise. For those with public pensions, it's a great spot to enjoy financial breaks with tropical views.

Nevada

There's no gambling with retirement savings in Nevada. A non-existent state income tax means no state taxes touch Social Security, pension, and retirement withdrawals. This financial freedom, combined with zero estate or inheritance taxes, makes Silver State an attractive spot for seniors. Whether settling in Las Vegas or a quiet desert town, more money stays in the bank.

South Dakota

Keeping it simple, South Dakota skips the state income tax. Social Security, pensions, 401(k)s, and IRAs are all tax-free. With no estate or inheritance tax either, retirees can make long-term plans without worrying about extra deductions. South Dakota delivers financial stability for pensioners, making it an excellent choice for those who want to stretch their savings as far as possible.

Tennessee

Tennessee serves up music, barbecue, and tax-free retirement. There's no state income tax, which means no state taxes touch Social Security and retirement withdrawals. The state also eliminated taxes on interest and dividends, making it even more retiree-friendly. Whether living in Memphis, Nashville, or the Smokies, retirees hold onto more of their income, enjoying their money without watching it disappear.

Texas

No state income tax and no pension tax make Texas a retiree's financial dream. Social Security benefits, 401(k) distributions, and IRA withdrawals remain whole. The lack of estate and inheritance taxes adds another layer of financial security. Be they enjoying big-city perks or small-town charm, seniors in the Lone Star State get to keep more of what they've worked hard for.