15 U.S. States Where Your Travel Budget Stretches Further — No Extra Taxes on Your Retirement Income
Before we get into the real action, here’s the gist: if you’re thinking about where to stretch your retirement dollars—road-tripping every summer or looking for a chill spot to settle in—you’ll want to consider how each state treats your pension, 401(k), IRA and Social Security.
Here are 15 states where the tax burden on retirement income is zero or barely there, so you can sip that iced tea without sweating a hefty tax bill. From sunny beaches to mountain vistas, these places will let you keep more of what you saved up—and spend it on what matters: adventures, grandkids, or just extra guac on taco night.
Florida
Florida isn’t just about theme-park lines and palm trees—it won’t touch any of your retirement income, period. That means pensions, IRAs, 401(k) withdrawals, and Social Security checks are tax-free at the state level.
With no personal income tax, your dollar goes further on everything from rent to dinner out, even with the state’s 6% sales tax in play.
Alaska
If you can brave the chill, Alaska pays you to live there. There is no state income tax or sales tax, and the annual Permanent Fund Dividend (about $1,702 per person in 2024) puts extra cash in your pocket.
Pensions, IRAs, 401(k) distributions, and Social Security? All off the hook. Sure, winters can be intense, but your after-tax budget will feel like a perpetual summer.
Nevada
Las Vegas isn’t just for high rollers. Since Nevada imposes no income tax on retirement distributions, they pass through your finances untaxed regardless of their source.
Gambling enthusiasts find Nevada’s sales tax, which is around 6.85% and can reach 8.24% after local taxes and fees, unimportant because it’s cheaper than taxes paid in other states.
Tennessee
When Tennessee eliminated its income tax, all retirement income remained untaxed, including pensions, IRAs, 401(k)s, and Social Security. Although Tennessee features one of the nation’s highest sales taxes at 7% with local rates up to 9.55%, people who enjoy dining out or live music events will find Tennessee financially advantageous.
Texas
Everything’s bigger in Texas—including the tax breaks. No state income tax means your retirement funds stay intact: Pensions, IRAs, 401(k)s, and Social Security are exempt from state taxes.
While Texas imposes a 6.25% sales tax escalating to about 8.2% after local adjustments, groceries are tax-free, so you can buy barbecue and kolaches without paying more taxes.
Washington
Washington doesn’t provide income tax relief simply because its tax system lacks an income tax component. Retirement income from pensions, IRAs, 401(k)s, and Social Security remains untaxed at the state level.
Most purchases are subject to a 6.5% state sales tax and an average local rate totaling 9.38%, while a 7% capital-gains tax affects high-income transactions yet leaves regular retirement checks exempt.
Wyoming
Wyoming’s low-tax flex extends to retirees: Kiplinger mentions that Wyoming does not assess state income tax on retirement income from pensions and IRAs, 401(k)s, and Social Security payments.
Travelers and residents can enjoy budget flexibility with Wyoming’s low state sales tax of 4%, which becomes approximately 5.44% after local additions, and property taxes average 0.55%.
South Dakota
Residents of South Dakota enjoy tax-free retirement income at the state level because there is no state income tax. The tax system in South Dakota maintains a 4.2% sales tax rate and a 1.01% property tax rate, resulting in a favorable overall tax burden that allows savings to grow unhindered.
Illinois
Bankrate says that although Illinois imposes a 4.95% flat income tax rate, it protects retirement income sources such as pensions, 401(k)s, IRAs, and Social Security from taxation to maintain your income during retirement. Retirees will find Illinois attractive because of its low property tax rates and reasonable sales taxes.
Iowa
Starting at age 55, Iowa residents pay no state tax on qualified pension income, IRAs, and 401(k) withdrawals and are fully exempt from Social Security taxes. The state switched to a flat income tax of 3.8% after a new law was passed in May 2024, maintaining protection for retirement income and allowing free funds for adventures.
Mississippi
Mississippi exempts pension income from taxes except in cases of early withdrawal, 401(k) distributions, and IRA distributions, while not taxing Social Security benefits. Non-retirement income faces a maximum tax rate of 4.4%, while retirement account withdrawals are taxed so lightly that they remain largely unnoticed.
Pennsylvania
Retirement income, such as pensions and Social Security benefits, is not taxed under Pennsylvania’s 3.07% income tax rate. Retirement income remains protected from core taxes, while local school and municipal taxes might add costs but leave room for additional spending on your favorite treats and vacations.
New Hampshire
New Hampshire ended its interest and dividends tax in 2025 while maintaining no wages or general income taxes. This means state tax collectors cannot claim pensions, IRAs, 401(k) distributions, and Social Security. Retirees benefit from a tax-free environment in an area without sales or income tax, but they must be cautious about winter road conditions.
Alabama
Alabama provides income tax exemptions for private pensions and government retirement pay while allowing seniors aged 65 and above to exclude their initial $6,000 of retirement income from taxes, and Social Security remains fully tax-exempt.
The remaining portion of your income is taxed at rates up to 5%, yet if your cash flow mainly consists of retirement accounts, you’ll notice minimal impact.
Hawaii
Hawaii exempts Social Security benefits, public pensions, and private pensions from state income tax while taxing employee-funded retirement plans such as 401(k)s and IRAs on their growth. The state imposes taxes on the gains of employee-funded retirement plans while leaving the actual contributions untaxed.
Despite typical taxation on 401(k) and IRA withdrawals, people benefit from Hawaii’s capped tax rates of 1.4%–11% and pension exemptions, which make living here feasible, especially for those who enjoy ocean views.
Pick your paradise: These 15 states allow you to preserve more of your retirement savings to enjoy your retirement activities rather than paying taxes. Your travel funds will increase significantly if you want sunny destinations or snowy adventures.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information. It is not intended to be professional advice.
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