5 States That Don’t Tax Your Retirement Income

This article takes a look at the 5 states that don’t tax your retirement income. If you wish to check out our detailed analysis on choosing your next retirement destination, you may go to 14 States That Don’t Tax Your Retirement Income.

5. Iowa

Insider Monkey Score: 13

Tax Friendliness: Moderately Tax-friendly

Cost of Living Index: 90.3

Next on our list of states that don’t tax your retirement income is the state of Iowa. The state of Iowa is the only moderately tax-friendly state on our list. Seniors who are aged 55 and above are eligible for tax exemption on their retirement income, which includes distributions from a 401(k), IRA, pension, annuity, and other assets. The sales tax rate in this state is 6%, and 18 counties collect a combined statewide rate of 7%. However, there are certain exemptions that seniors can avail such as on food, prescription drugs, and some types of non-prescription medication as well. Nevertheless, the cost of living for this state is pretty low, around 9.7% lower than the national average. This has helped it earn a spot in our top five.