While retirees may reap state income tax exemptions on public pension distributions and Social Security benefits in some states, the overall trend is that exclusions of state income tax on private pensions are less popular amongst the Great Fifty. Private pensions are fully taxed by the District of Columbia and the following twelve states:
- Arizona
- California
- Idaho
- Indiana
- Kansas
- Massachusetts
- Minnesota
- Nebraska
- North Dakota
- Rhode Island
- Vermont
- West Virginia
Retirees in Alabama, Hawaii and Illinois are the lucky ones, as just about all forms of retirement income are exempt from state taxation. In these three states, Social Security, military pensions, government pensions and some private pensions are not subject to taxation by the state.
Pennsylvania and Mississippi exempt 100% of all retirement income, even 401(k) and IRA distributions.
