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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat($n)),notifLabel:document.querySelector(".".concat(Xn))};t.notifDropdown&&so(e,t)}))}()}};]]>Giselle CancioFri, December 26, 2025 at 9:17 PM GMT+1 6 min readTim Robberts / Getty ImagesSome states exempt multiple forms of retirement income and eight states have no income tax at all.Illinois, Iowa, Mississippi, and Pennsylvania are considered to be the most tax-friendly states for retirees.Forty-one states don't tax Social Security income.Thirty-seven states don’t tax most military retirement pay.Fifteen states exempt pension income from state taxes.Nine states have no income tax at all.After a lifetime of contributing to Social Security, building up a retirement plan, or earning a pension, you may be bracing for a big tax hit in retirement. Now you’re ready to punch your last time card, and your state has its hand out for some tax dollars as well.Or does it? While federal taxes are unavoidable, some states are much kinder than others when it comes to taxing retirement income. Others don't tax it at all.Getty Images/Samuel WellsA man fishing the Arkansas RiverArkansas offers retirees a break by exempting up to $6,000 per year from public and private employer-sponsored pension plans and IRA distributions received after the age of 59½ or because of death or disability. It also doesn’t tax Social Security income or tax military retirement pay at all. Plus, Arkansas imposes no estate or inheritance tax, so your heirs won’t face additional tax burdens.Courtesy of Enjoy IllinoisIllinois is another state that is friendly to retirees. The state exempts pension income, 401(k) and IRA withdrawals, Social Security benefits, and military retirement pay from state taxes. However, Illinois does tax other investment earnings and taxes estates and inheritances.Travel Iowa Tourism A colorful fall scene in Burlington, IowaIowa recently updated its tax laws to be more retirement-friendly. As of January 2023, the state no longer taxes pension, 401(k), or IRA income for residents over age 55. If you qualify, you can enjoy tax-free retirement income starting at age 55.Two years later, on January 1, 2025, the state transitioned from a graduated tax system (with a top rate of 5.7%) to a flat tax system, with a rate of 3.8%. Also, the state no longer has an inheritance tax as of 2025.Joe Raedle / Staff / Getty ImagesGulfport, MississippiMississippi spares retirement plan distributions, pension income, Social Security income, and military retirement pay from state taxes. Early distributions from retirement plans generally don’t qualify for exempt status. This state doesn’t have an estate or inheritance tax, either.Media photo courtesy of the New Hampshire Division of Travel and Tourism Arethusa Falls is the most dramatic waterfall in New Hampshire, so make it a "must" on your tour.New Hampshire doesn’t tax Social Security or pension income although it does tax retirement account distributions that qualify as interest or dividends. This state doesn’t have an income tax on earned wages and most distributions count as income so they’re exempt.Notably, New Hampshire repealed its tax on interest and dividends as of Jan. 1, 2025, making it even more attractive for retirees. 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