Q&A: What states do not tax federal retirement income?
Question by ronfurg: What states do not tax federal retirement income?
I receive a retirement annuity from my service in the federal government and would like possibly to move to a state which does not tax the annuity income.
Best answer:
Answer by botygy
FL and TN do not have an income tax–there are likely others as well
What do you think? Answer below!
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Every state that has an income tax will tax your retirement income. So you are limited to: AL, FL, NV, SD, TX, WA and WY. You might like NH or TN also since they only tax interest and dividends.
Here is a chart you might find helpful to compare tax rates among states: http://www.taxadmin.org/fta/rate/ind_inc.pdf
Of course, any state that does not have an income tax is not going to tax your pension. In addition, there are states that tax wages but no pensions, such as Pennsylvania, and states that do not tax certain pensions, such as your federal pension.
Louisiana, for example, has an income tax, taxes pensions, but waives state income tax on certain pensions, including your federal pension.
There are 10 states that do not tax federal pensions:
Alabama
Hawaii
Illinois
Kansas
Louisiana
Massachusetts
Michigan
Mississippi
New York
Pennsylvania