Retirement Taxes By State 2019

Retirees continue to pay taxes in retirement. Taxes will be calculated much like how they are before retirement and it is important to estimate the amount one will pay in retirement so that finances can be planned accordingly.

If a person is relocating to a different state for retirement, it is important to examine the state taxes on retirement benefits. Some states are friendlier for retirees tax-wise than others, and because retirees have special financial concerns, taxes can be a large factor when deciding where it is best to retire.

Special financial concerns for retirees include whether Social Security benefits are taxable at the state level, property taxes, and how retirement account and pension withdrawals are taxed.

There are seven states with no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee impose income taxes only on dividends and interest (which Tennessee is getting rid of in 2020). These nine states are considered to be “tax-friendly” or “most-tax friendly” for retirees among others.

The ten most tax-friendly states for retirement (in no particular order) are:

  1. Alaska
  2. Florida
  3. Georgia
  4. Kentucky
  5. Mississippi
  6. Nevada
  7. New Hampshire
  8. Pennsylvania
  9. South Dakota
  10. Wyoming

Some states allow tax exemption for military personnel or emergency services personnel, or allow deductions up to a certain amount. Some states do not offer any retirement income tax benefits. These states are considered to be “not tax-friendly,” “least tax-friendly,” or “mixed.”

The ten least tax-friend states for retirement (in no particular order) are:

  1. Connecticut
  2. Indiana
  3. Kansas
  4. Maryland
  5. Minnesota
  6. Nebraska
  7. New Mexico
  8. Utah
  9. Vermont
  10. Wisconsin

In addition to income tax, retirees must also consider sales, property, estate, and inheritance tax rates.

Below is a table of each state’s tax friendliness for retirement categorized by most tax-friendly, tax-friendly, least tax-friendly, not tax-friendly, and mixed.

State Retirement Tax Friendliness 2019 Pop.
AlabamaTax-Friendly4,898,246
AlaskaMost Tax-Friendly735,720
ArizonaMixed7,275,070
ArkansasNot Tax-Friendly3,026,412
CaliforniaMixed39,747,267
ColoradoMixed5,770,545
ConnecticutLeast Tax-Friendly3,567,871
DelawareTax-Friendly975,033
District of ColumbiaMixed711,571
FloridaMost Tax-Friendly21,646,155
GeorgiaMost Tax-Friendly10,627,767
HawaiiTax-Friendly1,416,589
IdahoMixed1,790,182
IllinoisMixed12,700,381
IndianaLeast Tax-Friendly6,718,616
IowaNot Tax-Friendly3,167,997
KansasLeast Tax-Friendly2,910,931
KentuckyMost Tax-Friendly4,484,047
LouisianaTax-Friendly4,652,581
MaineMixed1,342,097
MarylandLeast Tax-Friendly6,062,917
MassachusettsNot Tax-Friendly6,939,373
MichiganNot Tax-Friendly10,020,472
MinnesotaLeast Tax-Friendly5,655,925
MississippiMost Tax-Friendly2,987,895
MissouriMixed6,147,861
MontanaNot Tax-Friendly1,074,532
NebraskaLeast Tax-Friendly1,940,919
NevadaMost Tax-Friendly3,087,025
New HampshireMost Tax-Friendly1,363,852
New JerseyMixed8,922,547
New MexicoLeast Tax-Friendly2,096,034
New YorkNot Tax-Friendly19,491,339
North CarolinaNot Tax-Friendly10,497,741
North DakotaTax-Friendly760,900
OhioMixed11,718,568
OklahomaNot Tax-Friendly3,948,950
OregonNot Tax-Friendly4,245,901
PennsylvaniaMost Tax-Friendly12,813,969
Rhode IslandNot Tax-Friendly1,056,738
South CarolinaTax-Friendly5,147,111
South DakotaMost Tax-Friendly892,631
TennesseeTax-Friendly6,833,793
TexasTax-Friendly29,087,070
UtahLeast Tax-Friendly3,221,610
VermontLeast Tax-Friendly627,180
VirginiaTax-Friendly8,571,946
WashingtonTax-Friendly7,666,343
West VirginiaNot Tax-Friendly1,791,951
WisconsinLeast Tax-Friendly5,832,661
WyomingMost Tax-Friendly572,381