Best States for Senior Taxes in 2026 (Age 65+)

The $6,000 Federal Kicker Every Senior Gets — Plus the State Layer

Quick answer: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law. The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify). Claim it on Schedule 1-A, Part V, line 37.

The federal piece is refreshingly simple: if you are 65 or older, you get an extra $6,000 deduction per eligible person for tax years 2025 through 2028, claimed on Schedule 1-A, Part V, line 37. It stacks on top of the regular standard deduction plus the existing over-65 add-on amount, so a qualifying couple effectively shields an additional $12,000 of income from federal tax. At a 12 percent marginal rate that is about $720 per person; at 22 percent it is about $1,320 per person — meaningful money that arrives with no relocation required.

The catch is the phaseout. The benefit phases out above $75,000 of modified adjusted gross income for single filers, or $150,000 for joint filers, gradually falling to zero. Required minimum distributions count toward that MAGI: a large RMD year can push you over the line and shrink the deduction, so coordinate withdrawal timing. If your RMDs are growing, model them with our RMD calculator and check the combined effect with our retiree tax refund calculator.

Then comes the state layer, which varies far more than the federal kicker. Your state decides whether your pension, 401(k), IRA, and Social Security checks face state income tax at all — and the gap between the friendliest and harshest states is worth thousands of dollars a year. A retiree with $60,000 of pension and IRA income pays $0 of state tax in Florida but can owe over $3,000 in a mid-bracket progressive state and far more at California's top rates. The ranked table below lays out the thirteen states where retirement income is effectively untaxed, with honest warnings about the property- and sales-tax tradeoffs hiding behind zero income tax.

Ranked: The 13 States That Do Not Tax Retirement Income

Quick answer: In 2026, 13 U.S. states will not tax your pension, 401(k), or IRA income — the nine states with no income tax at all plus Illinois, Mississippi, Pennsylvania, and Iowa. Wyoming, Nevada, and Florida lead on the full burden; Texas, Tennessee, and New Hampshire carry property- or sales-tax caveats.

The short list is clean: nine states have no income tax at all, and four more — Illinois, Mississippi, Pennsylvania, and Iowa — exempt retirement income through state law, giving thirteen states where retirement income is effectively untaxed. Illinois exempts pensions, 401(k), IRA, and Social Security income despite its 4.95 percent flat rate, which makes it a quiet haven for retirees who want big-city amenities without retirement-income tax. Pennsylvania exempts qualified retirement income at retirement age under its 3.07 percent flat rate, and Mississippi exempts qualified retirement income for residents age 59 and older with a 4.0 percent flat rate that is scheduled to keep falling. Iowa completes the group with its over-55 retirement-income treatment.

The asterisks matter. Texas levies zero income tax but offsets the gain with property taxes near 1.60 percent, the sixth-highest in the nation — a real cost for homeowners, though homestead exemptions soften the blow for primary residences. Tennessee pairs zero income tax with the second-highest sales tax nationwide at roughly 9.55 percent combined, which bites retirees who spend heavily on taxable goods. New Hampshire has no tax on retirement income but funds itself with property taxes near 1.86 percent, so renters often fare better than owners there. Illinois deserves a second look from skeptics: despite Chicago-area property taxes ranking among the nation's highest, the blanket exemption for pensions, 401(k), IRA, and Social Security income means a retiree living on $70,000 of investment and pension income can owe zero Illinois income tax. None of these caveats erases the income-tax win, but they belong in any honest move-or-stay spreadsheet. Compare the full fifty-state picture with our state tax calculators and the best states for retirees taxes hub.

Social Security by State: The 8 That Tax vs the 42 That Do Not

Quick answer: For the 2026 tax year, if you live in Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah or Vermont, some portion of your benefits may be subject to state income taxes. Everywhere else, benefits are state-tax-free — and a retiree living only on $30,000 of benefits pays nothing even in most of the eight.

Forty-two states plus the District of Columbia leave Social Security benefits fully alone. Only eight still take a slice: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. The trend is clearly toward zero — Kansas, Missouri, and Nebraska ended their Social Security taxes in 2024, and West Virginia ended its tax in 2026 — so the list of eight is a shrinking island, not a growing one.

Even inside the eight, most lower-income retirees owe nothing. Each of these states shields lower incomes with thresholds and partial exclusions, so a retiree living only on $30,000 of benefits pays nothing in practice. The state tax on Social Security generally bites middle- and higher-income retirees whose combined income clears the exclusion thresholds. Because those thresholds change year to year, always confirm the current figures with your state revenue agency rather than relying on last year's numbers — this page deliberately does not publish threshold tables that could go stale.

For the federal side of the same benefits — how much of your Social Security counts as taxable income federally, and how the senior deduction interacts — use our Social Security calculator before making withdrawal or Roth-conversion decisions.

The Bottom 5 for Senior Taxes — and the $75,000 Phaseout Tripwire

Quick answer: California (13.3 percent top rate), New York (10.9 percent with only a $20,000 exclusion at 59 and older), New Jersey (10.75 percent), Vermont, and Minnesota anchor the worst end for senior taxes. Wherever you live, the $6,000 senior deduction phases out above $75,000 MAGI single ($150,000 joint) — and RMDs can push you over.

California's 13.3 percent top income-tax rate is the highest in the nation, and unlike the thirteen friendly states it offers no broad pension or 401(k) exclusion — retirement income is taxed as ordinary income. New York reaches 10.9 percent with only a $20,000 exclusion available at age 59 and older, which covers a fraction of a typical retirement budget. New Jersey's 10.75 percent top rate completes the coastal trio. Vermont and Minnesota double-dip: both appear on the eight-state Social Security tax list and impose progressive income taxes with high top rates, making them the weakest overall combination for retirees with substantial income.

The phaseout tripwire applies in every state. The senior deduction's $75,000 single / $150,000 joint MAGI thresholds count all of your adjusted gross income — including pensions, IRA withdrawals, and required minimum distributions. A single filer with $60,000 of pension income plus a $20,000 RMD sits at $80,000 MAGI and loses part of the deduction. Strategies that keep MAGI down in high-income years — qualified charitable distributions directly from an IRA, Roth conversions timed in lower-income years before RMDs begin, careful sequencing of account withdrawals — all pair naturally with this deduction. Working seniors should note the deduction stacks with wage income too: part-time earnings after 65 still qualify for the same $6,000 shield. Model the RMD side with our RMD calculator and the refund side with our retiree tax refund calculator.

Estimates only — not tax advice. OBBBA deductions apply to federal income tax for tax years 2025–2028, subject to caps, phaseouts, occupation, and IRS rules. State wage and tax rules change yearly; confirm with the DOL, BLS, IRS, or your state revenue agency before making work or relocation decisions.