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Here are 13 states that won't tax your Social Security, 401(k), individual retirement account (IRA), or pension income. A map of the U.S. overlaid with $100 bills. Image source: Getty Images.
New Mexico taxes retirement income using state income tax rates, which range from 1.7% to 5.9% in 2024. Residents ages 65 and older can claim an $8,000 exemption to offset their tax burdens ...
Illinois charges a flat state income tax of 4.95 percent, but all retirement income is exempt from paying the tax. This includes pension payments as well as distributions from retirement plans ...
State Tax Burdens 2022 % of income. State tax rules vary widely. The tax rate may be fixed for all income levels and taxpayers of a certain type, or it may be graduated. Tax rates may differ for individuals and corporations. Most states conform to federal rules for determining: gross income, timing of recognition of income and deductions,
ERISA contains an exemption specifically regarding the Hawaii Prepaid Health Care Act (Hawaii Revised Statutes Chapter 393), which was enacted by that state a few months before ERISA was signed into law. As a result, private employers in Hawaii are bound by the rules of that state law in addition to ERISA.
Nevertheless, with most state income tax rates ranging anywhere from 4% to 13%, avoiding these income taxes could save you hundreds if not thousands of dollars per year.
Median household income and taxes State Tax Burdens 2022 % of income. State tax levels indicate both the tax burden and the services a state can afford to provide residents. States use a different combination of sales, income, excise taxes, and user fees. Some are levied directly from residents and others are levied indirectly.
Social Security plays a big role in many Americans' retirement security. ... state income taxes on Social Security benefits. ... tax returns since tax year 2022. For 2025, that full exemption will ...