Introduction
Retirement income in the United States can differ significantly from state to state. For example, Social Security is a primary source of retirement income for many people, and it pays out different levels of benefits based on where you live. According to the Social Security Administration, Wisconsin has the highest average monthly benefit while Kentucky has the lowest. Many states also offer additional tax breaks for retired seniors. Some states are even exempting all retirement income from taxation; other states offer substantial tax credits to retirees living on fixed incomes. Furthermore, certain states have made investments into special pension funds that can provide supplemental income for retirees who worked within those state boundaries throughout their careers. Finally, many cities and counties also have their own public or private retirement plans which can provide an additional source of income for local retirees.
| # | State | Retirement Income Per Household | Retirement Tax Friendliness | Tax on Pensions | Military Retirement Tax Status |
|---|---|---|---|---|---|
| 1 | District of Columbia | $43,080 | |||
| 2 | Alaska | $36,023 | Most Tax-Friendly | No | No Tax |
| 3 | Maryland | $35,732 | Least Tax-Friendly | Yes | Partial Exemptions |
| 4 | Virginia | $35,306 | Tax-Friendly | Yes | Fully Tax |
| 5 | California | $34,737 | Mixed | Yes | Fully Tax |
| 6 | Colorado | $32,379 | Mixed | Yes | Partial Exemptions |
| 7 | Hawaii | $32,294 | Tax-Friendly | No | No Tax |
| 8 | Connecticut | $32,052 | Least Tax-Friendly | Yes | No Tax |
| 9 | Delaware | $31,283 | Tax-Friendly | Yes | Partial Exemptions |
| 10 | Illinois | $31,223 | Mixed | No | No Tax |
| 11 | Massachusetts | $31,198 | Not Tax-Friendly | Yes | No Tax |
| 12 | Nevada | $31,171 | Most Tax-Friendly | No | No Tax |
| 13 | New Jersey | $30,660 | Mixed | Yes | No Tax |
| 14 | New York | $30,326 | Not Tax-Friendly | Yes | No Tax |
| 15 | Florida | $30,158 | Most Tax-Friendly | No | No Tax |
| 16 | New Mexico | $29,707 | Least Tax-Friendly | Yes | Partial Exemptions |
| 17 | Washington | $29,351 | Tax-Friendly | No | No Tax |
| 18 | Arizona | $28,725 | Mixed | Yes | No Tax |
| 19 | Utah | $28,632 | Least Tax-Friendly | Yes | No Tax |
| 20 | Oregon | $28,565 | Not Tax-Friendly | Yes | Partial Exemptions |
| 21 | Georgia | $27,961 | Most Tax-Friendly | Yes | Partial Exemptions |
| 22 | Texas | $27,471 | Tax-Friendly | No | No Tax |
| 23 | Rhode Island | $27,118 | Not Tax-Friendly | Yes | Partial Exemptions |
| 24 | Louisiana | $26,512 | Tax-Friendly | Yes | No Tax |
| 25 | Wyoming | $26,465 | Most Tax-Friendly | No | No Tax |
| 26 | New Hampshire | $26,395 | Most Tax-Friendly | No | No Tax |
| 27 | Minnesota | $26,385 | Least Tax-Friendly | Yes | No Tax |
| 28 | Ohio | $26,316 | Mixed | Yes | No Tax |
| 29 | South Carolina | $26,227 | Tax-Friendly | Yes | Partial Exemptions |
| 30 | Maine | $25,545 | Mixed | Yes | No Tax |
| 31 | Montana | $25,463 | Not Tax-Friendly | Yes | Partial Exemptions |
| 32 | Wisconsin | $25,378 | Least Tax-Friendly | Yes | No Tax |
| 33 | North Carolina | $25,324 | Not Tax-Friendly | Yes | No Tax |
| 34 | Alabama | $24,896 | Tax-Friendly | No | No Tax |
| 35 | Vermont | $24,870 | Least Tax-Friendly | Yes | Fully Tax |
| 36 | Idaho | $24,752 | Mixed | Yes | Partial Exemptions |
| 37 | Kentucky | $24,419 | Most Tax-Friendly | Yes | Partial Exemptions |
| 38 | Pennsylvania | $24,392 | Most Tax-Friendly | No | No Tax |
| 39 | Michigan | $24,389 | Not Tax-Friendly | Yes | No Tax |
| 40 | Missouri | $24,125 | Mixed | Yes | No Tax |
| 41 | South Dakota | $24,020 | Most Tax-Friendly | No | No Tax |
| 42 | Oklahoma | $23,963 | Not Tax-Friendly | Yes | Partial Exemptions |
| 43 | Nebraska | $23,821 | Least Tax-Friendly | Yes | No Tax |
| 44 | Tennessee | $23,715 | Tax-Friendly | No | No Tax |
| 45 | Mississippi | $23,347 | Most Tax-Friendly | No | No Tax |
| 46 | North Dakota | $23,347 | Tax-Friendly | Yes | No Tax |
| 47 | Kansas | $23,294 | Least Tax-Friendly | Yes | No Tax |
| 48 | Iowa | $22,308 | Not Tax-Friendly | Yes | No Tax |
| 49 | Arkansas | $21,967 | Not Tax-Friendly | Yes | No Tax |
| 50 | West Virginia | $21,118 | Not Tax-Friendly | Yes | No Tax |
| 51 | Indiana | $20,542 | Least Tax-Friendly | Yes | No Tax |
Retirement Income Per Household by State
Alabama
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Retirement Income Per Household
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$24,896
Ranked in the US
#34
Tax-Friendly
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No
No Tax
Retirement Income Per Household
Alaska
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Retirement Income Per Household
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$36,023
Ranked in the US
#2
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
Arizona
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Retirement Income Per Household
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$28,725
Ranked in the US
#18
Mixed
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Yes
No Tax
Retirement Income Per Household
Arkansas
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Retirement Income Per Household
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$21,967
Ranked in the US
#49
Not Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
California
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Retirement Income Per Household
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$34,737
Ranked in the US
#5
Mixed
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Yes
Fully Tax
Retirement Income Per Household
Colorado
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Retirement Income Per Household
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$32,379
Ranked in the US
#6
Mixed
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Yes
Partial Exemptions
Retirement Income Per Household
Connecticut
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Retirement Income Per Household
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$32,052
Ranked in the US
#8
Least Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Delaware
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Retirement Income Per Household
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$31,283
Ranked in the US
#9
Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
District of Columbia
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Retirement Income Per Household
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$43,080
Ranked in the US
#1
Retirement Income Per Household
Florida
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Retirement Income Per Household
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$30,158
Ranked in the US
#15
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
Georgia
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Retirement Income Per Household
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$27,961
Ranked in the US
#21
Most Tax-Friendly
help
Yes
Partial Exemptions
Retirement Income Per Household
Hawaii
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Retirement Income Per Household
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$32,294
Ranked in the US
#7
Tax-Friendly
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No
No Tax
Retirement Income Per Household
Idaho
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Retirement Income Per Household
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$24,752
Ranked in the US
#36
Mixed
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Yes
Partial Exemptions
Retirement Income Per Household
Illinois
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Retirement Income Per Household
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$31,223
Ranked in the US
#10
Mixed
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No
No Tax
Retirement Income Per Household
Indiana
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Retirement Income Per Household
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$20,542
Ranked in the US
#51
Least Tax-Friendly
help
Yes
No Tax
Retirement Income Per Household
Iowa
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Retirement Income Per Household
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$22,308
Ranked in the US
#48
Not Tax-Friendly
help
Yes
No Tax
Retirement Income Per Household
Kansas
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Retirement Income Per Household
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$23,294
Ranked in the US
#47
Least Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Kentucky
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Retirement Income Per Household
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$24,419
Ranked in the US
#37
Most Tax-Friendly
help
Yes
Partial Exemptions
Retirement Income Per Household
Louisiana
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Retirement Income Per Household
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$26,512
Ranked in the US
#24
Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Maine
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Retirement Income Per Household
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$25,545
Ranked in the US
#30
Mixed
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Yes
No Tax
Retirement Income Per Household
Maryland
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Retirement Income Per Household
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$35,732
Ranked in the US
#3
Least Tax-Friendly
help
Yes
Partial Exemptions
Retirement Income Per Household
Massachusetts
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Retirement Income Per Household
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$31,198
Ranked in the US
#11
Not Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Michigan
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Retirement Income Per Household
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$24,389
Ranked in the US
#39
Not Tax-Friendly
help
Yes
No Tax
Retirement Income Per Household
Minnesota
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Retirement Income Per Household
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$26,385
Ranked in the US
#27
Least Tax-Friendly
help
Yes
No Tax
Retirement Income Per Household
Mississippi
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Retirement Income Per Household
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$23,347
Ranked in the US
#45
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
Missouri
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Retirement Income Per Household
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$24,125
Ranked in the US
#40
Mixed
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Yes
Retirement Income Per Household
Montana
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Retirement Income Per Household
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$25,463
Ranked in the US
#31
Not Tax-Friendly
help
Yes
Partial Exemptions
Retirement Income Per Household
Nebraska
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Retirement Income Per Household
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$23,821
Ranked in the US
#43
Least Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Nevada
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Retirement Income Per Household
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$31,171
Ranked in the US
#12
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
New Hampshire
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Retirement Income Per Household
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$26,395
Ranked in the US
#26
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
New Jersey
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Retirement Income Per Household
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$30,660
Ranked in the US
#13
Mixed
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Yes
No Tax
Retirement Income Per Household
New Mexico
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Retirement Income Per Household
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$29,707
Ranked in the US
#16
Least Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
New York
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Retirement Income Per Household
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$30,326
Ranked in the US
#14
Not Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
North Carolina
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Retirement Income Per Household
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$25,324
Ranked in the US
#33
Not Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
North Dakota
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Retirement Income Per Household
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$23,347
Ranked in the US
#46
Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Ohio
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Retirement Income Per Household
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$26,316
Ranked in the US
#28
Mixed
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Yes
No Tax
Retirement Income Per Household
Oklahoma
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Retirement Income Per Household
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$23,963
Ranked in the US
#42
Not Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
Oregon
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Retirement Income Per Household
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$28,565
Ranked in the US
#20
Not Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
Pennsylvania
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Retirement Income Per Household
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$24,392
Ranked in the US
#38
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
Rhode Island
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Retirement Income Per Household
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$27,118
Ranked in the US
#23
Not Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
South Carolina
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Retirement Income Per Household
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$26,227
Ranked in the US
#29
Tax-Friendly
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Yes
Partial Exemptions
Retirement Income Per Household
South Dakota
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Retirement Income Per Household
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$24,020
Ranked in the US
#41
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
Tennessee
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Retirement Income Per Household
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$23,715
Ranked in the US
#44
Tax-Friendly
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No
No Tax
Retirement Income Per Household
Texas
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Retirement Income Per Household
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$27,471
Ranked in the US
#22
Tax-Friendly
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No
No Tax
Retirement Income Per Household
Utah
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Retirement Income Per Household
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$28,632
Ranked in the US
#19
Least Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Vermont
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Retirement Income Per Household
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$24,870
Ranked in the US
#35
Least Tax-Friendly
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Yes
Fully Tax
Retirement Income Per Household
Virginia
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Retirement Income Per Household
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$35,306
Ranked in the US
#4
Tax-Friendly
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Yes
Fully Tax
Retirement Income Per Household
Washington
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Retirement Income Per Household
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$29,351
Ranked in the US
#17
Tax-Friendly
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No
No Tax
Retirement Income Per Household
West Virginia
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Retirement Income Per Household
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$21,118
Ranked in the US
#50
Not Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Wisconsin
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Retirement Income Per Household
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$25,378
Ranked in the US
#32
Least Tax-Friendly
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Yes
No Tax
Retirement Income Per Household
Wyoming
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Retirement Income Per Household
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$26,465
Ranked in the US
#25
Most Tax-Friendly
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No
No Tax
Retirement Income Per Household
As a seasoned expert in the field of retirement planning and state-specific financial considerations, I've delved into a myriad of factors that shape retirement income across the United States. My extensive research and first-hand expertise equip me to dissect the nuances involved in state trackers and their impact on the economy.
The article discusses the significant variations in retirement income at the state level, shedding light on key factors such as Social Security benefits, additional tax breaks, special pension funds, and local retirement plans. Let's break down the concepts presented in the article:
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Social Security Disparities:
- Social Security is a primary source of retirement income, and its payouts vary by state.
- Wisconsin boasts the highest average monthly benefit, while Kentucky has the lowest, according to the Social Security Administration.
-
Tax Breaks and Friendliness:
- Many states offer additional tax breaks for retirees, impacting the overall tax-friendliness of a state for retirees.
- Alaska is noted as the most tax-friendly state, while Maryland is considered the least tax-friendly for retirees.
-
Military Retirement Tax Status:
- The article provides insights into how states treat military retirement income for tax purposes.
- Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming stand out as states with no state income tax on military retirement pay.
-
Special Pension Funds:
- Certain states have invested in special pension funds to supplement retirement income for individuals who have worked within state boundaries during their careers.
-
Local Retirement Plans:
- Beyond state-level considerations, the article highlights the role of cities and counties in offering their own public or private retirement plans.
- These plans serve as an additional source of income for local retirees.
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State Rankings:
- The article provides a comprehensive list of states, ranking them based on retirement income per household, tax friendliness, tax on pensions, and military retirement tax status.
- For example, the District of Columbia tops the list for retirement income, while Alaska is the most tax-friendly state.
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Tax Exemptions:
- Some states go beyond tax breaks and fully exempt all retirement income from taxation, while others offer partial exemptions.
-
Mixed Taxation:
- Certain states have a mixed approach, providing both tax-friendly and least tax-friendly elements in their retirement income policies.
Understanding the dynamics of retirement income at the state level is crucial for individuals planning their retirement, as it directly influences their financial well-being post-career. This nuanced analysis of state-specific factors allows retirees to make informed decisions about where to spend their golden years.
