5 States That Don’t Tax Retirement Pension Payouts

4. Alabama

Insider Monkey Score: 17

Cost of Living Index: 88.3    

Tax Friendliness: Tax-Friendly

Next on our list of states that don’t tax retirement pension payouts is Alabama. Alabama is a tax-friendly state for retirees, and the cost of living is 11.7% lower than the national average. Public and private pension income is not taxed in the state. Social Security benefits aren’t taxed either. However, retirement account withdrawals are fully taxed in the state. Retirees who own a home in the state also benefit from the low property tax rates. However, sales tax is one of the highest in the country.