Rankings · Taxes

Lowest retirement income by state

Tax on retirement income.

How a state treats pensions, 401(k) and IRA withdrawals. Nine states levy no income tax at all; four more tax wages but exempt retirement income, which is why Illinois can charge 4.95% on a salary and nothing on the same amount drawn from a 401(k). Everywhere else it is taxed as ordinary income, often with age or income-based exclusions this single figure cannot capture.

Not ranked, because this measure is not published for them: Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, Washington, Wisconsin, West Virginia, Wyoming.

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Source: State revenue departments via Tax Foundation, mid-2026. · How this is built