by Dr. Eowyn
PENSION
(a) 11 states that don’t tax public and qualified private pensions:
The states that are not on this list tax at least a partial amount or the total amount of public and private pensions. Some states will only tax private pensions, but not public pensions earned in that state.
- Alabama
- Alaska
- Hawaii
- Illinois
- Kansas
- Louisiana
- Massachusetts
- Michigan
- Mississippi
- New York
- Pennsylvania
(b) 5 states that tax both private and public pensions:
- California
- Indiana
- Nebraska
- Rhode Island
- Vermont
Source: Financial Web
SOCIAL SECURITY
Your Social Security benefits are taxable! Depending on your income, the federal government can tax up to 85% of your benefits. Happily, most states, 37 in all, exempt Social Security from state taxes; 9 of these states have no state income tax. However, some states that exempt Social Security benefits take a big bite out of other types of retirement income. Maryland, for example, excludes Social Security benefits from taxation, but distributions from individual retirement accounts (IRAs) are fully taxed.
Here are the 37 states that don’t tax Social Security benefits (source: Kiplinger):
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin
- Wyoming
- Washington, DC
10 STATES THAT DON’T TAX PENSION OR SOCIAL SECURITY:
- Alabama
- Alaska
- Hawaii
- Illinois
- Louisiana
- Massachusetts
- Michigan
- Mississippi
- New York
- Pennsylvania