State Income Tax Map for Retirees

State income taxation is the single largest variable cost in retirement after federal tax. A retiree drawing $200,000 annually from mixed sources can pay anywhere from $0 to $26,000 in state income tax depending on the state of residence — a cumulative thirty-year difference exceeding $400,000 in present-value terms. The map below covers the four categories most retirees actually face.

No state income tax (9 states)

Alaska, Florida, Nevada, New Hampshire (no tax on wages or retirement income; tax on interest and dividends repealed effective 2025), South Dakota, Tennessee, Texas, Washington, and Wyoming impose no broad-based personal income tax. Washington imposes a 7% tax on long-term capital gains above $270,000 (2024 indexed), enacted in 2021 and upheld by the Washington Supreme Court in Quinn v. State, 526 P.3d 1 (2023). Tennessee and New Hampshire historically taxed only interest and dividends; both have repealed.

States that exempt Social Security entirely (41 states + DC)

Most states either do not tax Social Security or exempt it entirely. The remaining nine that tax Social Security in some form: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Among these, most provide income-based exemptions that eliminate the tax for moderate-income retirees. West Virginia is phasing out Social Security taxation entirely over 2024–2026 under H.B. 4880. Missouri, Nebraska, and Kansas repealed Social Security taxation effective 2024.

States that fully or partially exempt pension and retirement-account income

• Full exemption of all retirement income (including IRA/401(k) withdrawals): Illinois, Iowa (for taxpayers 55+), Mississippi, Pennsylvania.
• Partial exemption with age- or income-based caps: most other states. Examples include New York ($20,000 exclusion of pension income), Georgia ($65,000 retirement-income exclusion for 65+), Michigan (phased exclusion based on age and birth year).
• Full taxation of all retirement income: California, Connecticut (with limited exemptions), Nebraska, Vermont.

Highest-rate states for high-income retirees

For retirees with $500,000+ AGI:

• California: top rate 13.3% (12.3% + 1% mental health surtax on income over $1M).
• Hawaii: top rate 11% on income over $200,000 single / $400,000 MFJ.
• New Jersey: top rate 10.75% on income over $1M.
• Oregon: top rate 9.9% on income over $125,000 single / $250,000 MFJ.
• Minnesota: top rate 9.85% on income over $193,240 MFJ (2024 indexed).
• New York: top rate 10.9% on income over $25M, with combined state-and-city rates exceeding 14.776% for New York City residents in the top bracket.

Worked example: $200K retirement income, three states

Retired couple, MFJ, total retirement income $200,000 (split $60K Social Security, $80K IRA, $40K pension, $20K qualified dividends). Federal taxable income approximately $134,000 (after standard deduction and SS partial inclusion).

• Florida: $0 state income tax.
• Pennsylvania: $0 state income tax. Pennsylvania exempts all retirement-plan distributions and Social Security; only the qualified dividends ($20K) hit the 3.07% flat rate. State tax: $614.
• California: Full taxation of IRA and pension; Social Security exempt. California taxable income ~$120,000; tax approximately $7,200.

Over 30 years (assuming inflation-adjusted but stable real income), the California-versus-Florida differential exceeds $300,000 in present value at a 3% discount rate.

State estate and inheritance taxes

Twelve states plus DC impose an estate tax in 2025: Connecticut ($13.99M exemption, matched to federal), Hawaii ($5.49M), Illinois ($4M), Maine ($6.8M), Maryland ($5M), Massachusetts ($2M), Minnesota ($3M), New York ($7.16M with cliff), Oregon ($1M), Rhode Island ($1.78M), Vermont ($5M), Washington ($2.193M), DC ($4.873M). Six states impose an inheritance tax on the heirs: Iowa (phasing out by 2025), Kentucky, Maryland (also has estate tax), Nebraska, New Jersey, Pennsylvania.

Common mistakes

• Optimizing on income tax alone. A no-income-tax state with high property tax (Texas, New Hampshire) may cost a retiree more than a moderate-income-tax state with lower property tax. Total tax burden requires modeling all three: income, property, sales.
• Assuming Social Security is always exempt. Verify the destination state's current treatment; rules changed rapidly between 2022 and 2025.
• Ignoring state estate tax thresholds. A move to Massachusetts ($2M) or Oregon ($1M) from a non-estate-tax state may expose the entire estate to state-level tax.
• Failing to coordinate Roth conversions with state move. A massive conversion executed in the last California year can cost six figures of avoidable state tax.

Sources

• Tax Foundation, "State Tax Maps": taxfoundation.org/data/all/state/state-tax-maps/
• Federation of Tax Administrators, state revenue department links: taxadmin.org/state-tax-agencies/
• 4 U.S.C. §114, source-tax limitation: law.cornell.edu/uscode/text/4/114
• West Virginia H.B. 4880 (2024), Social Security phase-out: wvlegislature.gov H.B. 4880
• Quinn v. State, 526 P.3d 1 (Wash. 2023), capital gains tax: courts.wa.gov 1009281

Relocation can shift after-tax income by 10–15% for a typical retiree. Explore the free educational tool.