Which States Tax Social Security

Where you live in retirement can impact your retirement income because different states tax the “three legs” of FERS, and CSRS, differently.

For FERS retirees, they should have three sources of income to draw from upon retiring from the Federal Government: TSP, FERS, and Social Security – sometime referred to as the “three legs” of a FERS retirement. Retirees under the CSRS pension might have some Social Security or TSP income, but the majority of their money in retirement comes from CSRS. FERS or CSRS annuities, Social Security benefits, and (traditional) TSP distributions are subject to federal taxation. There’s no getting around that. Even if you move to another country (one where you’re able to receive your federal pension), all three types of retirement income are subject to tax-withholding, although there a few exceptions.

States taxes are different story. Most states do not tax Social Security benefits, but there are 13 that do: Colorado, Connecticut, Kansas, Minnesota, Missouri Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.

Learn more about how your federal retirement income is taxed at no-cost webinar!

There are 12 states that tax neither TSP distributions nor your federal pension: Alaska, Florida, Illinois, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Then there are 2-3 states that do not tax federal pension income, but do tax your TSP distributions: Hawaii and Alabama. (*New York also excludes public pension income, like FERS or CSRS, from income tax but does tax some private retirement plans.)

One last thing to consider when deciding where to live in retirement is property taxes and local/city taxes. Sometimes, these types of taxation will offset any savings you may have had by moving to another state. Below is a chart that lays out all 50 states (plus DC), and depicts which ones tax FERS or CSRS income, which tax traditional TSP and IRA withdrawals, and which tax social security benefits. They will also be ranked not alphabetically, but by which states had the lowest property taxes in 2019 to which had the most expensive property tax rates.

How States Tax Retirement Income

Property Tax Rate

*lowest to highest

State Tax FERS/CSRS Income? Tax traditional TSP withdraws? Tax Social Security?
0.28% Hawaii NO YES NO
0.41% Alabama NO YES NO
0.51% Colorado YES YES YES
0.55% Louisiana YES YES NO
0.56% Washington, DC YES YES NO
0.57% South Carolina YES YES NO
0.57% Delaware YES YES NO
0.58% West Virginia YES YES YES
0.60% Nevada NO NO NO
0.61% Wyoming NO NO NO
0.62% Arkansas YES YES NO
0.63% Utah YES YES YES
0.66% Arizona YES YES NO
0.69% Idaho YES YES NO
0.71% Tennessee NO NO NO
0.76% California YES YES NO
0.80% New Mexico YES YES YES
0.81% Mississippi NO NO NO
0.82% Virginia YES YES NO
0.84% Montana YES YES YES
0.84% North Carolina YES YES NO
0.85% Indiana YES YES NO
0.86% Kentucky YES YES NO
0.89% Florida NO NO NO
0.90% Oklahoma YES YES NO
0.92% Georgia YES YES NO
0.97% Missouri YES YES YES
0.97% Oregon YES YES NO
0.98% North Dakota YES YES YES
0.98% Washington NO NO NO
1.09% Maryland YES YES NO
1.12% Minnesota YES YES YES
1.19% Alaska NO NO NO
1.23% Massachusetts YES YES NO
1.31% South Dakota NO NO NO
1.36% Maine YES YES NO
1.41% Kansas YES YES YES
1.54% Michigan YES YES NO
1.56% Ohio YES YES NO
1.57% Iowa YES YES NO
1.58% Pennsylvania NO NO NO
1.63% Rhode Island YES YES YES
1.72% New York* NO YES NO
1.73% Nebraska YES YES YES
1.80% Texas NO NO NO
1.85% Wisconsin YES YES NO
1.90% Vermont YES YES YES
2.14% Connecticut YES YES YES
2.18% New Hampshire NO NO NO
2.27% Illinois NO NO NO
2.49% New Jersey YES YES NO
Benefits Ben, STWS

**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.

Which States Tax Social Security

Which States Tax Social Security, TSP, or FERS/CSRS Income?