Culture

13 States That Won't Tax Your Social Security, 401(k), IRA, or Pension Income

13 States That Won't Tax Your Social Security, 401(k), IRA, or Pension Income

Some parts of the country are tax havens for retirees.

Many retirees might agree with the sentiment expressed in the Beatles' 1960s song, "The Taxman." The lyrics include, "If you drive a car, car, I'll tax the street. If you try to sit, sit, I'll tax your seat. If you get too cold, cold, I'll tax the heat. If you take a walk, walk, I'll tax your feet. Taxman!"

However, the taxman won't be as problematic for retirees everywhere in the U.S. Here are 13 states that won't tax your Social Security, 401(k), individual retirement account (IRA), or pension income.

Let's start with nine states that don't have an income tax at all. The list currently includes:

Washington state does have a tiered capital gains tax that could affect some retirees, but it doesn't tax personal income. The first $1 million of capital gains in the state is subject to a tax rate of 7%. Any capital gains over $1 million are subject to this tax plus an additional 2.9% tax.

Four other states have income taxes but don't tax retirement income from Social Security, 401(k) plans, IRAs, or pensions. These states are:

Mississippi plans to reduce its state income tax over time until it's fully eliminated. However, for now, income (other than retirement income) is taxed at a 4.4% rate above $10,000. Also, early distributions from retirement accounts may be subject to state income taxes. It's a similar story in Pennsylvania: Early withdrawals from IRAs and other retirement plans may be taxed.

Are retirees who live in other states on the hook for paying taxes on all of their retirement income? The good news is that's not the case in most states. Forty-one states don't tax Social Security retirement benefits (including the 13 states that don't tax any retirement income):

In addition, the District of Columbia levies an income tax but doesn't tax Social Security benefits.

That leaves nine states where Social Security benefits are still taxed: