5 States That Don’t Tax Retirement Pension Payouts

3. South Dakota

Insider Monkey Score: 19

Cost of Living Index: 92.4    

Tax Friendliness: Very Tax-Friendly

The very tax-friendly state of South Dakota is next on our list of states that don’t tax retirement pension payouts. This means that social security benefits, income from 401(k)s and IRAs, and even pension income are not taxed in the state. The cost of living is another plus of retiring to this state, which is 7.6% lower than the national average.