The Most and Least Retirement-Tax-Friendly States in 2026

Two retirees with the same Social Security check, the same pension, and the same 401(k) can end up with very different amounts to spend — simply because of the state they live in. Some states tax none of it; others tax all three. In 2026, 14 states take nothing from Social Security, pensions, or 401(k)/IRA withdrawals, while at the hard end, Minnesota taxes the most. Here's the full spectrum, scored 0 (nothing taxed) to 6 (Social Security, pensions, and retirement-account withdrawals all fully taxed).

The least retirement-tax-friendly states

The states that tax retirement income hardest are Minnesota, Vermont, New Mexico, California, Oregon, Idaho. Take Minnesota: Social Security is partially taxed, pension income is fully taxed, and 401(k)/IRA withdrawals are fully taxed. For a retiree drawing a pension plus retirement-account income, that's a real, recurring cut to spendable income — on top of these states often carrying an above-average cost of living.

The 8 states that still tax Social Security

Most states have stopped taxing Social Security benefits — but 8 still do in 2026, usually with age or income limits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont. Even where the tax is partial, it's worth checking the thresholds, because crossing an income limit can pull your benefits into the taxable column. This list has shrunk steadily as states repealed the tax; expect it to keep shrinking.

The most retirement-tax-friendly states

At the opposite end, 14 states tax none of the three retirement income streams — the nine with no state income tax at all, plus a handful (Illinois, Iowa, Michigan, Mississippi, Pennsylvania) that levy an income tax on workers but fully exempt retirement income. If keeping your retirement income whole is the priority, that's the group to look at — and among them, the cheapest places to live win on value. We ranked those by cost of living in the best states to retire in 2026.

Taxes aren't the whole retirement picture

A tax-friendly state that's expensive can still cost a retiree more than a modest-tax state that's cheap — so weigh the tax treatment against cost of living, healthcare, and where your family is. But on the tax line specifically, the difference between the friendliest and harshest states is large and entirely knowable in advance. See exactly how your state treats Social Security, pensions, and 401(k)/IRA withdrawals — and the nest egg you'd need — on its retirement page.

Methodology

Each state's treatment of Social Security, pension, and 401(k)/IRA income for tax year 2026 is sourced from Kiplinger, AARP, and state Departments of Revenue, and shown with an as-of date on each state's retirement page. The 0–6 score adds a simple burden weight per stream (not taxed = 0, partially taxed = 1, fully taxed = 2). Treatment can depend on age, income, and whether a pension is public or private — check your state's rules for specifics. Informational, not financial advice. See our methodology.