14 States Where Your Pension Won’t Get Taxed

Hawaii-1
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Hawaii

Pensions: Want to spend your golden years on sandy beaches, lying under the sun and sipping cocktails? Then, Hawaii is the place to go. Want to keep your pension intact? Again, the Aloha State is the place where you can do just that. That’s because Hawaii doesn’t levy any taxes on retirement distributions from a private or public pension plan on one condition, though: if you didn’t make contributions to the plan. Otherwise, the portion of your pension income related to your contributions will be taxed.
401(k)s and IRAs: Distributions from 401(k) plans and IRAs are subject to state income tax. On the bright side, if your employer made matching contributions to your 401(k) plan you can get an additional deduction for the portion matched by your employer.
Social Security Benefits: Social Security benefits are not subject to taxes in Hawaii.
Income Tax Range: In terms of taxable income in Hawaii, the lowest tax rate is 1.4% while the highest rate is 11%.

 

Illinois

Pensions: Private pension income is completely exempt from taxes in Illinois if it comes from a qualified employee benefit plan. Government or military pensions are tax-free as well.
401(k)s and IRAs: When it comes to 401(k) plans and IRAs, the Prairie State is also one of the few states that doesn’t tax distributions to these retirement plans if the plan is a qualified employee benefit plan. The same goes for IRA distributions.
Social Security Benefits: Illinois doesn’t tax Social Security benefits.
Income Tax Range: Illinois has a fixed income tax rate of 4.95%.

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14 thoughts on “14 States Where Your Pension Won’t Get Taxed”

  1. 16
    9

    Great article
    Hope you follow up with other Tax issues/problem living in those state
    I.E sales taxes, Inheritance Tax (Wash bad)
    I am activly looking to get out of Calif
    Florida and Wy my two places so far

  2. 5
    2

    What about Connecticut we are taxed to death!!! We need to get out share! The government is so critical to all those who have people who are like me on social security!! Plus all the people in this state that have loss their jobs due to the pandemic. I am a shame with the government and nothing they do for us!!!

  3. 2
    4

    Washington State; correct, no income tax…yet! The Gov. has been pushing for one for years. Where did you get they don’t tax SS benefits?? They tax the crap out of me, both Social Security and 457 (like IRA’s) disbursements. And, every city/county has a sales tax as high as 10.3%.

  4. 3
    3

    How many of these states have a high sales tax instead of taxing income? I know Washington does. No income tax – but state, counties and cities all charge sales tax.

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