Pension Tax by State Calculator

Estimate how much state tax you might pay on your pension income. This calculator compares the tax treatment of pensions across a sample of states, showing you which are tax-free, which offer partial exemptions, and which tax pensions fully. See your potential annual state tax bill and how much you could save by relocating to a more tax-friendly location.

This tool is for any retiree or future retiree with a defined benefit pension who wants to understand how state taxes will impact their retirement budget. Choosing a state is a major decision, and taxes are a key factor. For a broader view, compare your results with the best states to retire for taxes in 2026 and see how taxes fit into your overall plan with the main retirement calculator. If you're considering taking a lump sum instead of monthly payments, use the pension buyout calculator.

After you enter your income and select a state, the calculator provides a "Tax Friendliness Score" for your chosen state. You will also see a bar chart comparing the estimated annual tax across all included states, a detailed table breaking down the tax treatment for each, and a summary of your potential annual savings.

Begin by entering your annual pension income. This should be the gross amount you expect to receive from your pension plan each year before any federal or state taxes are withheld. This is the primary income source the calculator analyzes.

Next, input your other retirement income. This field is for additional taxable income you expect, such as withdrawals from a 401(k), Traditional IRA, or taxable Social Security benefits. This is important because states that fully tax retirement income will often apply their tax rate to this income as well. Use our Social Security calculator to estimate your benefits.

Then, select your state and filing status. Use the "Selected State" input to choose your current state or a state you are considering moving to from the provided list. The calculator uses a number index for each state, which is explained in the input's description. For "Filing Status," choose whether you will file your state tax return as a single individual or married filing jointly, as some states offer different tax exclusions for couples.

Once your information is entered, click "Calculate" to see your results. The tool will instantly compare your tax situation across all the states in its database.

Annual Pension Income

This is the total amount of money you receive from your defined benefit pension plan over one year, before any deductions. It is the foundation of the calculation. A higher pension income generally means state tax differences will have a larger financial impact. Enter the gross amount, not the net amount you might see on a pay stub.

Other Retirement Income

This input accounts for other taxable income sources that can affect your state tax liability, especially in states that tax all forms of retirement income. This includes benefits from Social Security, distributions from a Traditional 401(k) or IRA, and any other income subject to state tax. In states that exempt pension income, this input may have little to no effect on the calculation for pension tax, but it is critical for states that tax broadly.

Selected State

This is your home base for the comparison. Choose your current state to see how it stacks up, or select a potential retirement destination to evaluate its tax impact. The calculator includes a representative sample of states with different tax policies to illustrate the range of possibilities. Relocating can have a major impact on your budget, so also consider using a retirement cost of living calculator to see the bigger picture.

Filing Status

Your tax filing status—typically Single or Married Filing Jointly in retirement—can change how your pension is taxed. Some states that offer partial tax exemptions on pension income provide a larger deduction for married couples. This input ensures the calculation uses the correct exclusion amount based on the rules for states like Colorado and Georgia in our sample.

This calculator estimates your state tax liability based on a simplified model of each state's tax rules for pension income. It categorizes each of the 13 sample states into one of three groups:

1. No-Tax States: These states either have no state income tax (e.g., Florida, Texas) or specifically exempt all qualifying pension income from state taxes (e.g., Illinois, Pennsylvania). For these states, the estimated tax is $0.

2. Partial-Exclusion States: These states tax pension income but allow retirees to exclude a certain amount from their taxable income first (e.g., New York, Georgia). The calculator subtracts the applicable exclusion amount (which may depend on your filing status and age) from your annual pension income. It then applies the state's representative tax rate to the remaining, non-excludable portion.

3. Fully-Taxed States: These states treat pension income as regular taxable income with no special exemptions (e.g., California, Vermont). The calculator applies the state's representative tax rate to your pension income and, in this model, your other retirement income as well.

The calculator uses a single representative tax rate for each state to simplify the comparison. In reality, most states have progressive tax brackets, and your actual tax rate would depend on your total taxable income and available deductions and credits. This tool is designed for educational and comparative purposes, not for precise tax filing. It does not account for local income taxes, property taxes, sales taxes, or other factors that contribute to your total tax burden.

The formulas below show how the calculator estimates your tax liability for different types of states.

Taxable Pension Income (Partial Exclusion States)

For states that offer a partial deduction, the taxable amount is your pension income minus the allowed exclusion.

exclusion amount = state exclusion for your filing status
taxable amount = max(0, annual pension income - exclusion amount)

Estimated State Tax (Partial Exclusion States)

The estimated tax is the taxable amount multiplied by the state's representative tax rate.

estimated tax = taxable amount x (state tax rate / 100)

Estimated State Tax (Fully Taxed States)

For states that tax all retirement income, the tax is based on your combined pension and other income.

total taxable income = annual pension income + other retirement income
estimated tax = total taxable income x (state tax rate / 100)

Potential Savings

This shows the difference in tax between your selected state and a state with zero pension tax.

potential savings = selected state estimated tax - best state estimated tax (which is $0)

Tax Friendliness Score

The score compares your selected state's tax to the highest-tax state in the sample. A score of 100 means your state has the lowest possible tax ($0).

score = ((worst state tax - your state tax) / worst state tax) x 100

State taxation of retirement income is complex and varies widely. Generally, states fall into three categories. Understanding these is the first step in finding the best states to retire for taxes.

1. States with No State Income Tax: These are often the most attractive for retirees. States like Florida, Texas, Nevada, Washington, Wyoming, South Dakota, and Alaska levy no state income tax at all. This means your pension, Social Security, 401(k) withdrawals, and other income are all free from state-level income tax. Tennessee repealed its Hall Income Tax effective January 1, 2021, and New Hampshire repealed its interest and dividends tax effective January 1, 2025. Both are now fully no-income-tax states.

2. States with Income Tax but Favorable Exemptions: Many states have an income tax but have created special rules to attract retirees. These rules often include:

• Full Pension Exemption: States like Illinois, Mississippi, and Pennsylvania have a state income tax but completely exempt qualifying pension income.
• Partial Pension Exemption: States like New York, Colorado, and Georgia allow you to exclude a portion of your pension income from state taxes, often up to a certain limit that can vary by age and filing status.
• Social Security Exemption: Most states with an income tax do not tax Social Security benefits, but a minority still do.

3. States That Fully Tax Retirement Income: A number of states offer few or no special breaks for retirees. In these states, your pension income is generally treated like wage income and is fully subject to state income tax. California, Vermont, and Minnesota are examples included in this calculator. Even in these states, tax liability can be managed with a comprehensive retirement budget.

While minimizing taxes is a major goal for many retirees, it should not be the only factor in deciding where to live. A state with low income taxes might have high property taxes, sales taxes, or a higher overall cost of living that negates any savings.

Consider these other critical factors:

• Cost of Living: Housing, groceries, utilities, and transportation costs can vary dramatically between states. A low-tax state may not be a low-cost state. Use the retirement cost of living calculator to compare expenses.
• Healthcare: Access to quality doctors, hospitals, and specialists is crucial in retirement. Also, research the cost of Medicare supplemental plans and long-term care in the area. The retirement healthcare cost calculator can help you estimate these expenses.
• Proximity to Family and Friends: For many, being close to children, grandchildren, and social networks is more valuable than tax savings.
• Climate and Lifestyle: Consider your preferences for weather, culture, and recreational activities. A vibrant city, a quiet rural town, or a coastal community all offer different retirement experiences.

The ideal retirement location offers a healthy balance between financial benefits and quality of life.

Tax Friendliness Score: This score, from 1 to 100, gives you a quick snapshot of how your selected state treats pension income compared to the others in our sample. A high score (80+) indicates a very tax-friendly state, while a low score (below 40) suggests the state is one of the least tax-friendly for pensioners.

Your State Tax & Potential Savings: These two numbers are the core financial takeaway. "Your State Tax" is the estimated annual tax bill for your selected state. "Potential Savings" shows how much you could save each year by moving to a state that does not tax pension income. Over a 20- or 30-year retirement, these savings can add up to a significant amount.

State Pension Tax Comparison Chart: This bar chart provides a powerful visual comparison, ranking the sample states from highest tax to lowest tax based on your income. It allows you to quickly identify the most and least expensive states at a glance.

Detailed State Comparison Table: This table provides the numbers behind the chart. For each state, you can see its tax treatment policy (e.g., "Pension fully exempt," "First $20,000 exempt"), the calculated taxable amount of your pension, and the final estimated tax. Use this to understand why a state's tax is high or low.

Unlike a savings calculator, improving your results here primarily involves strategic decisions about location rather than contributions.

1. Consider Relocating to a No-Tax State: The most direct way to eliminate state tax on your pension is to move to a state with no income tax. This calculator includes Florida, Texas, and Nevada as examples.

2. Explore States That Exempt Pension Income: If moving to a no-tax state isn't appealing, the next best option is a state that has an income tax but doesn't apply it to pensions, like Illinois or Pennsylvania. Your other income may still be taxed, but your primary pension benefit will be protected.

3. Maximize Exclusions in Partial-Tax States: If you live in or are considering a state with partial exemptions, make sure you understand the rules. Some states have age requirements or offer larger deductions for married couples. Structuring your finances to take full advantage of these rules can lower your bill.

4. Model the Full Picture: Use this tool as a starting point, then input the estimated state tax into a more comprehensive tool like the main retirement calculator. Seeing how state taxes affect your entire retirement cash flow provides the most complete picture.

1. Ignoring Other Taxes: Don't focus so heavily on income tax that you forget about property, sales, and estate taxes. A state with no income tax might have very high property taxes that could cost you more in the long run.
2. Forgetting Other Income Sources: Even if your pension is exempt, withdrawals from your Traditional 401(k) or IRA are often still taxable at the state level.
3. Not Verifying Pension Type: Some states treat government, military, and private pensions differently. Always verify the specific rules for your type of pension. A military retirement pay calculator can help with military-specific planning.
4. Moving for Taxes Alone: Relocating to a state you don't enjoy just to save on taxes can be a costly mistake if it makes you unhappy or increases your cost of living in other areas.