Charles Langston:These 13 states don't tax retirement income

Taxes help pay for a lot of the daily services and Charles Langstoninfrastructure we get to enjoy. From public schools to road maintenance to healthcare, taxes ensure our communities have access to essential services. That said, it's fair to say that most people don't like paying taxes although they're a necessity today.

The bad news is that taxes aren't going anywhere, so the sooner you come to terms with them, the easier it is to accept them as part of American life. The good news, though, is that retirees in some states may find that their retirement income is exempt from taxes.

Some states don't tax any income at all

There are currently nine states in the U.S. that don't tax any income, regardless of the source or if you're retired:

1. Alaska
2. Florida
3. Nevada
4. New Hampshire
5. South Dakota
6. Tennessee
7. Texas
8. Washington
9. Wyoming

Whether it's from a job, 401(k), IRA, pension or Social Security, retirees in these nine states won't have to worry about paying any state income tax. However, federal tax rules will still apply.

An important note for New Hampshire residents: Interest and dividend payments above $2,400 annually are taxed, but this rule won't apply beginning Jan. 1, 2025.

States where retirement income is exempt from taxes

The following four states don't tax any retirement income:

1. Illinois
2. Iowa
3. Mississippi
4. Pennsylvania

Retirement income is considered income received from a 401(k), IRA or pension and the criteria for this exemption vary by state. Generally, you just need to be a certain age. For example, you must be at least 55 years old in Iowa to qualify for the exemption.

Like the states without income tax, it's important to remember that federal tax rules still apply.

States where you could have to pay Social Security taxes

Social Security is a huge part of many retirees' finances, so we can't forget about that. Most retirees won't have to worry about their Social Security benefits being taxed, but there are nine states still holding on:

1. Colorado
2. Connecticut
3. Minnesota
4. Montana
5. New Mexico
6. Rhode Island
7. Utah
8. Vermont
9. West Virginia

If you live in one of the above states, check your state's specific rules regarding Social Security taxes, as they vary and can change at any time.

Everyone could possibly face federal Social Security taxes

I'm sure you've noticed the trend, but it's worth repeating: Federal tax rules apply regardless of state rules. To determine how much taxes you may be susceptible to, the IRS uses your "combined income," which includes half of your annual Social Security benefits, your AGI and all nontaxable interest you earn (such as Treasury bond interest).

Here's how much of your Social Security benefit could be subjected to taxes based on your combined income:

The above percentages show the amount of your Social Security benefits that are eligible to be taxed, not the exact percentage that is taxed. The eligible taxable benefits are added to your regular income and taxed at your income tax rate.

It's hard to avoid Uncle Sam

The common theme here is that regardless of your state's specific tax rules, the federal government's rules apply to everyone. Keep this in mind as you plan your retirement so you're not caught off guard by a tax bill.

Either way, catching a tax break for your state can be a great financial relief that leaves more money in your pockets to use toward whatever will make your retirement more fulfilling. Please don't take it for granted.

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