State Income Tax on RMDs: Which States Tax Your Retirement Distributions?
Everyone knows RMDs are federally taxable — they're treated as ordinary income at rates up to 37%. But state income tax on your RMD is a separate question that varies enormously. A retiree taking $80,000/year in RMDs in Florida owes $0 to the state. The same retiree in California owes up to $6,000+ in state tax on that same distribution. Which bucket is your state?
- 9 states have no income tax at all — RMDs are state-tax-free by default.
- 5 states tax income but fully exempt retirement distributions (including IRAs and 401(k)s).
- Many states offer partial exemptions based on age, income, or account type.
- ~14 states tax RMD income just like wages — with rates up to 13.3% (California).
Group 1 — No state income tax (9 states)
These states impose no personal income tax at all, so RMDs, Roth conversions, Social Security, and all other retirement income are completely exempt from state taxation.
| State | Notes |
|---|---|
| Alaska | No income, sales, or estate tax. Oil revenue funds government. |
| Florida | No income tax. Also no inheritance or estate tax at state level. |
| Nevada | No income tax. Sales tax applies to goods. |
| New Hampshire | Fully phased out investment income tax as of 2025. Now zero income tax. |
| South Dakota | No income tax, no inheritance tax. |
| Tennessee | Eliminated investment income tax (Hall Tax) in 2022. No income tax on wages or retirement distributions. |
| Texas | No income tax. Property taxes are high (~1.36% avg effective rate) — but the school tax freeze for age 65+ locks school district taxes in place. No estate tax. See the Texas-specific guide with TX vs. NY calculator → |
| Washington | No income tax. Note: WA has a 7% capital gains tax on gains over $270,000 (2026), but retirement account distributions are ordinary income and are not subject to it.1 |
| Wyoming | No income tax, no estate or inheritance tax. |
Group 2 — State income tax, but retirement income fully exempt (5 states)
These states have a state income tax, but specifically exempt IRA distributions, 401(k) withdrawals, and other qualified retirement income from taxation.
Illinois (4.95% flat rate)
Illinois has one of the most retirement-friendly tax codes in the country despite its flat income tax rate. All retirement income — including IRA and 401(k) distributions, pensions, and Social Security — is fully exempt from Illinois income tax under 35 ILCS 5/203(a)(2)(F), with no age minimum and no income ceiling.2 A retiree taking $120,000/year in RMDs owes $0 to Illinois. The catch: property taxes average 2.07% statewide (second highest nationally) and the Illinois estate tax exemption is only $4 million per person with no portability. → Complete Illinois retirement income tax guide: IL vs. Wisconsin calculator + estate tax planning
Mississippi (graduated rates to 4.7%)
Mississippi exempts all qualified retirement income from state income tax, including distributions from IRAs, 401(k)s, 403(b)s, and defined benefit pensions. Social Security is also exempt.3
Pennsylvania (3.07% flat rate)
Pennsylvania does not tax distributions from IRAs, 401(k)s, or other qualified retirement plans after reaching retirement age. Social Security is also exempt. Note: PA did not allow a deduction for traditional IRA contributions, so if you contributed while a PA resident, the distributions of those after-tax contributions would not be double-taxed — effectively the entire distribution is still exempt in most cases.4 Roth conversions after 59½ are also exempt from PA income tax — a meaningful advantage vs. most other income-tax states. Important caveat unique to Pennsylvania: while income tax on IRAs is $0 during your lifetime, Pennsylvania's inheritance tax applies at death — IRA assets passing to adult children are taxed at 4.5% of account fair market value with no exemption threshold. → Complete Pennsylvania retirement income tax guide: $0 income tax on RMDs, the inheritance tax calculator, and planning strategies
Iowa (graduated rates to 5.7%)
Iowa eliminated state income tax on retirement income including IRA and 401(k) distributions for taxpayers 55 and older beginning in tax year 2023. Social Security is also exempt.5
Michigan (4.25% flat rate, $135,220 joint deduction — phase-in complete)
Michigan completed its four-year phase-in of a unified retirement income deduction in 2026. All retirees — regardless of birth year — can now deduct up to $67,610 (single) / $135,220 (married filing jointly) of combined IRA, 401(k), and pension income before any Michigan tax applies. Social Security is fully excluded from Michigan income at every income level. Military pensions are exempt with no cap. The flat 4.25% rate applies only to retirement income above the deduction cap — so a married couple with $120,000 in RMDs owes $0 Michigan income tax. At $220,000, the tax is approximately $3,100 — far below California or New York at the same income. Michigan has no estate tax.6 → Complete Michigan retirement income tax guide: $135,220 joint deduction, calculator vs. FL/CA/NY, QCD + Roth conversion strategies
Group 3 — Partial exemptions (major states)
These states tax retirement income but offer meaningful deductions or exclusions based on age, income level, or account type. For retirees in these states, the strategy is to understand the cliff so you can manage income to stay under it.
New York
New York excludes up to $20,000 of qualifying pension and retirement income (including IRA and 401(k) distributions) for taxpayers age 59½ and older.7 Social Security is fully exempt. Income above the $20K exclusion is taxed at NY's graduated rates (3.9% to 10.9% in 2026 under Chapter 59). For a retiree taking $100,000 in RMDs, $20,000 is sheltered and $80,000 is taxable — at this income level, that's roughly $4,500–$5,000 in NY state tax. NYC residents add a city income tax layer of 3.1%–3.9%. The $20K threshold has not been indexed to inflation since the 1980s — a real planning constraint. See the New York-specific guide with state + city tax calculator →
New Jersey
New Jersey offers a retirement income exclusion of up to $75,000 per person ($150,000 married filing jointly) for taxpayers with total income under $150,000.8 Applies to pension, IRA, and 401(k) distributions. For retirees with modest RMDs who stay under the income threshold, NJ can be effectively tax-free for retirement income. Above the threshold, the exclusion phases out.
Georgia
Georgia allows a retirement income exclusion of $35,000 per person for those age 62–64, and $65,000 per person for those age 65 and older.9 For a married couple both 65+, up to $130,000 in retirement income can be excluded. Social Security is fully exempt at all ages and does not count against the exclusion. Above the exclusion, income is taxed at Georgia's flat 4.99% rate (HB 463, 2026). Most retirees with moderate RMDs stay under the exclusion or owe very little — a married couple with $150,000 in combined RMDs owes approximately $998. Military retirement pay is fully exempt at all ages. → Complete Georgia retirement income tax guide: $65K exclusion, 4.99% rate, GA vs. FL vs. CA calculator
Colorado
Colorado allows taxpayers age 65 and older to deduct up to $24,000 of retirement income from their Colorado taxable income.10 Applies to IRA and 401(k) distributions, pensions, and Social Security. Colorado's flat income tax rate is 4.4% (2026). Most retirees with RMDs under ~$50K-$60K per year will owe little or no Colorado state tax after applying the deduction and standard deduction.
South Carolina
South Carolina allows a retirement income deduction of $15,000 per person for those age 65 and older, applicable to IRA and pension distributions. Below age 65, a $3,000 deduction applies. Rates range up to 6.2% (2026).
Group 4 — States that fully tax retirement income
In these states, RMDs are taxed like any other ordinary income. The federal-state combined marginal rate for a high-income retiree can be substantial.
| State | Top rate | Notes |
|---|---|---|
| California | 13.3% | No retirement income exemption. The 9.3% bracket starts at ~$72,725 (single) / ~$145,450 (MFJ) — most retirees with significant RMDs land here. Social Security is fully exempt (CA R&TC §17085). See California-specific guide with tax calculator → |
| Minnesota | 9.85% | No retirement income exemption. Top rate of 9.85% applies above $193,240 (single) / $321,450 (MFJ). Social Security taxed above $84,490 AGI (single) / $108,320 (MFJ) — exemption phases out 10% per $4K. At $150K RMD, MN often costs more than California. See Minnesota guide with tax calculator → |
| Oregon | 9.9% | No IRA/401(k) exemption for retirement income. Top rate of 9.9% kicks in above $125,000 (single). Oregon also taxes lottery winnings, capital gains, and all retirement distributions at ordinary income rates. |
| Vermont | 8.75% | Taxes most retirement income; some SS exemption for lower-income filers. |
| Connecticut | 6.99% | Social Security exempt for lower/moderate income. IRA and 401(k) distributions are taxable. |
| Nebraska | 5.84% | SS benefits exempt as of 2025 phase-in. IRA/401(k) distributions taxable at ordinary income rates. |
| Montana | 5.9% | Taxes all retirement income. Small pension exemption ($4,880) for lower-income filers. |
| Rhode Island | 5.99% | Modest retirement income exemption for those at or above Social Security FRA, but phaseouts limit benefit for moderate/higher-income retirees. |
| Wisconsin | 7.65% | Government pensions get an exemption; private retirement income including IRAs is largely taxable. |
| Idaho | 5.8% | Taxes IRA and 401(k) distributions as ordinary income. Some pension exemption for government retirees. |
| Kansas | 5.7% | Social Security exempt for incomes under $75K. IRA/401(k) distributions taxable. |
| North Carolina | 4.5% | Eliminated most retirement income exemptions; government pensions retain some protection. Private IRA/401(k) distributions taxable. |
| Arizona | 2.5% | Flat rate as of 2023. Low rate, but no broad retirement income exemption. On a $100K RMD, that's $2,500 — relatively modest. |
Why state taxes change the Roth conversion math
When evaluating whether to do Roth conversions in the pre-RMD window, state taxes affect the calculation in two ways:
- The conversion is taxable now. A $100,000 conversion in Minnesota costs $6,000–$9,850 in state tax (depending on bracket) on top of federal. The higher the state tax, the less attractive the conversion is at high income levels.
- The future RMD is taxable later. If you're in a high-tax state now but plan to move before RMDs kick in, the conversion is worse. If you're planning to stay, avoiding future taxable RMDs has the same state-tax value as converting them avoids.
QCDs and state taxes
Qualified Charitable Distributions (QCDs) reduce your federal AGI — but their state tax treatment varies. In most states that tax retirement income, QCDs also reduce state taxable income because they reduce your federal AGI, which most states use as a starting point. In a few states with complex conformity rules, the interaction may differ. Verify with your advisor or state tax authority.
The planning implication: know your combined rate
When evaluating a Roth conversion, a QCD, or a distribution strategy, you need the combined federal + state marginal rate. A retiree in the 22% federal bracket in:
- Florida: 22% combined (state = 0)
- New York: ~28–30% combined (NY adds 5.5–6.85% on income above $20K)
- California: ~30–35% combined (CA adds 8–10.3% for moderate-to-high RMDs)
- Minnesota: ~29–31% combined (MN adds 6.8–7.85% for that bracket)
For a $2M+ account, the difference in lifetime taxes between a high-tax and low-tax state — assuming the same withdrawal schedule — is easily $100,000–$300,000. This is why state tax planning is not a footnote in retirement distribution planning. It's often one of the largest levers available.
Sources
- Washington State DOR — Capital Gains Excise Tax. Applies to capital gains above $270,000 (2026); retirement account distributions are ordinary income, not subject to this tax.
- Illinois Department of Revenue — Retirement Income Exemptions. All qualifying retirement income exempt from Illinois income tax.
- Mississippi Department of Revenue — Individual Income Tax FAQs. Qualifying retirement income including IRA/401(k) distributions exempt.
- Pennsylvania Department of Revenue — Pension and Retirement Income. IRA and qualified plan distributions exempt from PA income tax at retirement age.
- Iowa Department of Revenue — Retirement Income Exclusion. Full exclusion for retirement income including IRAs/401(k)s for taxpayers age 55+, effective 2023.
- Kiplinger — 2026 State Tax Changes. Michigan phase-out of retirement income tax, including qualified pension and IRA/DC plan distributions.
- New York State Department of Taxation — Retirement Income. $20,000 pension and retirement income exclusion for taxpayers age 59½+.
- New Jersey Division of Taxation — Retirement Income Exclusion. Exclusion up to $75,000 single / $150,000 MFJ for taxpayers with income under $150,000.
- Georgia Department of Revenue — Retirement Income. $35,000 exclusion for 62–64; $65,000 for 65+.
- Colorado Department of Revenue — Pension/Annuity Subtraction. $24,000 deduction for taxpayers 65+ on qualifying retirement income including IRAs.
State tax rates and exemptions verified as of April 2026. State tax law changes frequently — confirm your specific state's current rules with a tax professional or your state's department of revenue.
Related reading
- Arizona retirement income tax 2026 — 2.5% flat rate, SS and military exempt
- Colorado retirement income tax 2026 — 4.4% flat rate, $24K/person pension deduction, ~0.50% property tax (lowest of any major retirement state)
- State retirement income tax calculator — compare your tax burden across all 50 states interactively
- Retirement tax relocation guide — should you move to a no-tax state for your RMDs?
- RMD Calculator — calculate this year's required distribution
- Roth Conversion Calculator — model lifetime tax savings
- IRMAA Planning — Medicare surcharges triggered by RMD income
- Complete RMD & Retirement Distribution Planning Guide
- Match with a fee-only RMD specialist
Talk to a specialist who understands your state
State taxes on RMDs can be as large as the investment gains you're trying to protect. A fee-only advisor who knows your state's rules — and when moving states makes financial sense — is worth the conversation.
RMD Advisor Match is a matching service. We connect you with vetted fee-only financial advisors in our network. Content is for informational purposes only and does not constitute financial, tax, or legal advice. RMDAdvisorMatch is a referral service, not a licensed advisory firm. We may receive compensation from professionals in our network.
Frequently Asked Questions
Which states do not tax required minimum distributions (RMDs)?
Nine states impose no income tax at all — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — making RMDs state-tax-free by default. Five additional states have income taxes but fully exempt retirement distributions: Illinois (35 ILCS 5/203), Pennsylvania, Iowa (age 55+), Mississippi, and Michigan (up to $135,220 joint deduction in 2026). Together, roughly 14 states impose $0 state tax on most retirees' RMD income.
Does California tax IRA withdrawals and required minimum distributions?
Yes. California taxes IRA distributions, 401(k) withdrawals, and RMDs as ordinary income at rates up to 13.3% — the highest state income tax rate in the country. California provides no retirement income exemption. Social Security is the only exception (CA R&TC §17085). On a $100,000 annual RMD, a California retiree typically owes $6,000–$9,300 in state income tax depending on total income and filing status. See the California retirement income tax guide for a full calculator.
If I move to Florida or another no-tax state, can my old state still tax my RMDs?
No. Federal law (4 U.S.C. § 114) prohibits states from taxing certain retirement income — including IRA distributions, 401(k) withdrawals, and pensions — paid to residents of other states. Once you establish domicile in a no-income-tax state and properly notify your former state's tax authority, your former state cannot tax your future RMDs. California is known for aggressive auditing of departing high-income residents — thorough documentation of your move matters. See the retirement tax relocation guide for the full domicile checklist.
Do qualified charitable distributions (QCDs) reduce state income taxes on RMDs?
In most states, yes. A QCD reduces your federal Adjusted Gross Income (AGI), and since most income-tax states calculate state taxable income starting from federal AGI, the reduction flows through to your state return. In California, a $50,000 QCD saves approximately $4,650–$6,650 in state income tax in addition to eliminating the federal tax on that income. In Minnesota (9.85% top rate), the state savings on a $111,000 QCD can exceed $10,000. A few states with non-conformity rules may differ — verify with your state's tax authority or a fee-only advisor.
Which states are best and worst for retirees with large RMDs?
Best: no-income-tax states (Florida, Texas, Nevada, Wyoming, South Dakota) and full-exemption states (Illinois, Pennsylvania, Iowa, Mississippi, Michigan). Worst: California (13.3%), Minnesota (9.85%), and Oregon (9.9%), none of which offer any retirement income exemption at any income level. For a retiree taking $200,000/year in RMDs over 20 years, the lifetime difference in state taxes between California and Florida typically exceeds $400,000. Use the state retirement income tax calculator to compare your specific situation.
Does your state of residence affect the tax cost of Roth conversions?
Yes, significantly. Roth conversions are taxable in the year of conversion, and most income-tax states tax them at ordinary income rates. Converting $100,000 in California costs approximately $9,300 in state tax (9.3% bracket) on top of federal. The same conversion in Florida or Nevada costs $0 in state tax. For retirees planning a multi-year conversion campaign in the window before RMD age (ages 60–72), establishing domicile in a no-income-tax state before beginning conversions is one of the highest-value timing decisions available. See the Roth conversion strategy guide for the full analysis.