State-by-state guide to pension and retirement income taxation
No, Michigan does not tax Social Security benefits. As of the 2024 tax year, Michigan is one of 38 states that fully exempt Social Security income from state income tax. That means you will not pay Michigan state income tax on your Social Security retirement, disability, or survivor benefits. However, your benefits may still be…
No, Illinois does not tax pension income for most retirees. For tax year 2024 and beyond, qualifying pension and retirement account distributions are fully exempt from Illinois state income tax when you are age 65 or older or totally and permanently disabled. The most common failure mode: retirees under 65 assume their pension is automatically…
Yes, regular IMRF (Illinois Municipal Retirement Fund) member contributions are made with pre-tax dollars. Your required contribution is deducted from your gross pay before federal and Illinois state income tax is calculated, lowering your taxable income each year. The practical trade-off: you get an immediate tax break on every contribution year, but you will owe…
Yes, New Jersey allows eligible retirees to exclude up to $100,000 of pension and retirement income from state income tax for the 2024 tax year, provided your total gross income from all sources stays below $100,000 (single, head of household, or married filing jointly). You claim this exclusion on Form NJ-1040, Line 20a (verify the…
Maryland allows retirees to exclude a portion of their pension and retirement income from state income tax. For 2025, the maximum exclusion is $34,000 for single filers (age 65 or older or totally disabled) and $43,200 for married couples filing jointly when both spouses are 65+ or disabled. These amounts are adjusted annually for inflation;…
No, Michigan does not tax Social Security benefits. The state explicitly exempts all Social Security income from the individual income tax, regardless of your total income, filing status, or age. If Social Security is your only source of retirement income, you owe $0 in Michigan state income tax — and you may not even need…
If you receive a German public pension (gesetzliche Rente), your tax-free amount is not a single dollar figure — it’s a fixed euro amount calculated once, based on the year you first started drawing the pension. For pensions that began in 2024, 84% is taxable and 16% is tax-free. That percentage depends on your pension…
Yes, South Carolina taxes most pension income as regular income. But the state gives you two important breaks: a retirement income deduction that can cut your taxable amount significantly, and a full exemption for military retirement pay. Social Security benefits are not taxed at the state level. The practical outcome for most retirees: you will…
If you live in Florida or plan to retire there, the direct answer is no – Florida does not tax pension income at the state level. Florida has no personal income tax, so your pension from a private employer, government job, military service, or union plan is completely exempt from state tax. But federal income…
If you live in Hawaii, your Employees’ Retirement System (ERS) pension is generally exempt from Hawaii state income tax. But that exemption has limits—and the answer changes if you move, take a lump sum, or receive a refund of contributions. Hawaii Revised Statutes §235-7 exempts qualified pension and retirement benefits from state tax, including monthly…
If you’re a public-school teacher paying into a state teacher retirement system, your mandatory pension contributions are not deductible on your federal tax return. They are already treated as pre-tax dollars—your W‑2 Box 1 wages are reduced by those contributions before you ever file. Claiming them again as an itemized deduction is double‑dipping, and the IRS…
The simplified method is the IRS-mandated calculation for figuring the taxable portion of your pension when you made after-tax contributions. It lets you recover that cost tax-free over a fixed number of monthly payments set by IRS tables. You report the taxable amount on Form 1040, line 5b and the total pension received on line…
Yes, New York allows you to exclude up to $20,000 of pension and retirement income from state income tax in 2025 — but the exclusion has strict eligibility rules, age requirements, and income phaseouts that can eliminate the benefit entirely if your AGI exceeds $95,000 (single) or $132,500 (married filing jointly). This exclusion applies to…
Your pension payer must withhold federal income tax from your monthly benefit unless you submit IRS Form W-4P with a valid exemption. If you don’t provide a W-4P, the payer will use a default rate: single filer with zero allowances, which results in a flat 10% withholding on each periodic payment. You can change this…
Yes, pension payments count as taxable income by the IRS, and you control how much federal income tax gets taken from each check. You do that by submitting Form W-4P (Withholding Certificate for Periodic Pension or Annuity Payments) to your pension payer. Unlike wage withholding, pension withholding is generally voluntary: you can choose a flat…
