Markets

Insider Trading

Hedge Funds

Retirement

Opinion

15 States That Don’t Tax Retirement Pension Payouts

This article takes a look at the 15 states that don’t tax retirement pension payouts. If you wish to skip our detailed analysis on navigating retirement taxes, you may go to 5 States That Don’t Tax Retirement Pension Payouts.

Navigating Retirement Taxes: From Strategic Planning to State Choices

If you think taxes are going to leave you alone in retirement, think again. Contrarily, they do exist even in your golden period, underscoring the importance of proactive planning to navigate their impact effectively. According to The Charles Schwab Corporation (NYSE:SCHW), there are two “unknowns” looming in retirement: the taxable portion of your income, and their tax rate. Even though these unknowns exist, The Charles Schwab Corporation (NYSE:SCHW) asserts that it is still possible to plan for a “potentially better tax outcome”.

“One approach is to use accounts with a variety of tax treatments so you can better control your taxable income in retirement”.

-Rob Williams, managing director of financial planning, retirement income, and wealth management at the The Charles Schwab Corporation (NYSE:SCHW) Center for Financial Research.

The four main account types—tax-deferred, Roth, taxable, and health savings accounts (HSAs)—offer unique tax advantages. Employing strategies such as capturing employer matches, utilizing HSAs for medical expenses, maximizing tax-advantaged savings, investing tax-efficiently, and considering Roth conversions can offer a diversified and flexible approach to managing taxes in retirement.

“Anticipating future tax rates is always a bit of a guessing game, but with several account types at your disposal, there’s potential to build in flexibility and a surprising level of control over future tax bills.”

– Rob Williams

Employing this approach can indeed provide a measure of control over your retirement taxes. Yet, a significant number of retirees are also leveraging an alternative strategy: moving states. That’s right, a large number of homebuyers have been actively moving states in the past many years, many of whom are retirees. For the fourth consecutive year, California leads U-Haul Holding Company (NYSE:UHAL)’s Growth Index as the state with the highest number of outbound moves, according to a study conducted by U-Haul Holding Company (NYSE:UHAL). California is notorious for its high cost of living, and it is no surprise that homebuyers are looking to move out and into states that offer nicer weather, and lower cost of living. The U-Haul Holding Company (NYSE:UHAL) Report claims that their growth index “is an effective gauge of how well states and cities are attracting and maintaining residents”, even though it does not directly correlate to economic or population increases.

So where are potential retirees moving anyway? Apparently, Texas, Florida, and the Carolinas are the most popular states that individuals are moving to. Texas and Florida are not only revered for their warm climate, but also because of their attractive cost of living. Moreover, both of these states don’t tax social security. Since retirees have fixed incomes to depend on, they are increasingly favoring states that have a lower tax burden, a lower-than-average cost of living, and a warm climate to ensure they can lead a comfortable life.

This article delves into the tax landscape for retirees, specifically focusing on states that offer the advantage of not taxing retirement pension payouts. Understanding the tax landscape can significantly impact financial decisions and contribute to a more secure and informed retirement. Therefore, let us embark on this exploration to uncover how much a retiree can benefit by choosing a state that doesn’t tax retirement pension payouts.

Methodology

To compile the list of states that don’t tax retirement pension payouts, we have filtered out all the states that tax pension incomes. Next, we ranked the states on their cost of living index and tax friendliness. Cost of living has been sourced from the Missouri Economic Research & Information Center, whereas tax-friendliness has been sourced from Smart Asset. Scores were summed up and places were ranked in ascending order from the lowest to the highest Insider Monkey Score.

By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.

Here are all the states that don’t tax retirement pension payouts:

15. Hawaii

Insider Monkey Score: 2

Cost of Living Index: 180.3  

Tax Friendliness: Moderately Tax-Friendly

Hawaii is considered a moderately tax-friendly state that doesn’t tax Social Security benefits or income from public and private pensions. However, other types of retirement income, such as withdrawals from retirement accounts, are charged at a high-income tax rate. The combined sales tax rate for the state is 4.4%, and even groceries are taxed. Prescription drugs, however, are tax-exempt. The average effective property tax rate is one of the lowest in the US at 0.29%, largely because home prices in the state are high. The cost of living in the state is a whopping 80.3% higher than the national average. Moderate tax-friendliness, high cost of living, and high home prices make Hawaii one of the worst states to retire to for taxes and cost of living.

14. Washington

Insider Monkey Score: 6

Cost of Living Index: 116     

Tax Friendliness: Tax-Friendly

Another state that doesn’t tax your pension or social security is Washington. The state of Washington doesn’t tax any form of retirement income, which is why retirees can enjoy their fixed incomes tax-free in this state. This is good news even for the retiree who wishes to work after retirement, as they can enjoy tax-free income in the state. Property taxes in the state are also less than the national average, with the average effective property tax rate standing at 0.94%. However, the one tax this state relies on heavily for its revenue is the sales tax, which is 6.5%. The combined sales tax rate can be as high as 10.5%, whereas the cost of living is also 16% higher than the national average.

13. New Hampshire

Insider Monkey Score: 7

Cost of Living Index: 114.1  

Tax Friendliness: Tax Friendly

New Hampshire is another state that doesn’t tax retirement pension payouts. The state doesn’t tax social security benefits either. However, dividends and interests are taxed for the current tax year at 5% and will continue to be taxed until it’s phased out by December 2024. According to the NH Department of Revenue Administration, the I&D (Interests and Dividends) tax shall be repealed for taxable periods beginning after December 31, 2024. The state doesn’t have a sales tax, either. However, property taxes are some of the highest in the country.

12. Pennsylvania

Insider Monkey Score: 10

Cost of Living Index: 95.6    

Tax Friendliness: Tax-Friendly

Next up on our list of states that don’t tax retirement pension payouts is Pennsylvania. Social Security benefits are not taxed in the state, whereas payments from retirement accounts like 401(k)s and IRAs are also tax-exempt. Income from pensions is also tax-exempt for seniors who are aged 60 or older. Moreover, the cost of living is 4.4% lower than the national average. The average total sales tax rate is 6.17%, while property taxes are quite high.

11. Texas

Insider Monkey Score: 11

Cost of Living Index: 92.7    

Tax Friendliness: Tax-Friendly

Texas doesn’t tax retirement income or pension payouts since there is no income tax in the state. The cost of living is also favorable for retirees, which is 7.3% lower than the national average. While the cost of living and taxes are favorable for the average retiree, the state does however earn its revenue from the high sales and property taxes in the state. The average effective property tax rate in the state is 1.9%, which is one of the highest in the country. On the other hand, the sales tax rate is about 6.25%, and the local sales tax can be as high as 2%.

10. Alaska

Insider Monkey Score: 12

Cost of Living Index: 125.2  

Tax Friendliness: Very Tax-Friendly

Alaska may be known for its crazy high cost of living, but the state doesn’t tax retirement income or social security. There is no sales tax, no estate tax, and no inheritance tax either. However, there is a property tax, which stands at 1.17%. Alaska may be very tax-friendly for retirees, but the high cost of living and harsh weather tend to offset this financial advantage. No wonder it is one of the worst states to retire on social security.

9. Iowa

Insider Monkey Score: 13

Cost of Living Index: 90.3    

Tax Friendliness: Moderately Tax-Friendly

Iowa is a moderately tax-friendly state to retire to, with a favorable cost of living. The living expenses in this state are 9.7% lower than the national average. Regarding taxes on retirement income, all retirement income is exempt for taxpayers who are at least 55 years old. The sales tax rate is 6%, while the combined rate can be as high as 7%. Certain exemptions are available such as on food, prescription drugs, and some types of non-prescription medication.

8. Illinois

Insider Monkey Score: 14

Cost of Living Index: 92.1    

Tax Friendliness: Tax-Friendly

Another state that doesn’t tax retirement pension payouts is Illinois. The state of Illinois charges a flat individual income tax rate of 4.95%. However, seniors don’t have to pay taxes on retirement income. Income from most retirement plans is exempt from taxes, which includes payments from qualified employee benefit plans (401(k) plans and traditional pensions), government retirement plans, military pensions, and IRAs. Earnings from other sources, such as investment income, are taxable.

7. Nevada

Insider Monkey Score: 15

Cost of Living Index: 101     

Tax Friendliness: Very Tax-Friendly

The state of Nevada is very tax-friendly for retirees, and the cost of living is a tad bit high (1% higher than the national average). This is because the state doesn’t have an income tax, and retirees get to receive their income tax-free. Property taxes in the state are low as well, whereas sales taxes are a little higher than the national average.

6. Tennessee

Insider Monkey Score: 15

Cost of Living Index: 90.3    

Tax Friendliness: Tax-Friendly

The state of Tennessee doesn’t have an income tax either. This means that at the state level, retirement income isn’t taxed for retirees. property taxes in the state are quite low as well. The average effective property tax rate is 0.65%, while the sales tax rate is 9.61%. Nevertheless, the cost of living is an advantage of retiring here, which is 9.7% lower than the national average.

Click to continue reading and see the 5 States That Don’t Tax Retirement Pension Payouts.

Suggested Articles:

Disclosure: None. 15 States That Don’t Tax Retirement Pension Payouts is published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

Act Now and Unlock a Potential 100+% Return within 12 to 24 months.

We’re now offering month-to-month subscriptions with no commitments.

For a ridiculously low price of just $9.99 per month, you can unlock our in-depth investment research and exclusive insights – that’s less than a single fast food meal!

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $9.99.

2. Enjoy a month of ad-free browsing, exclusive access to our in-depth report on the Trump tariff and nuclear energy company as well as the revolutionary AI-robotics company, and the upcoming issues of our Premium Readership Newsletter.

3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!


No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a month later!

A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…