It’s true: These 37 states tax some pension income

Here’s some really good news for those approaching or in retirement: 41 states don’t tax Social Security benefits — and that number has grown in recent years. But the news is not good at all. In fact, there are a lot of states that tax some pension income in one form or another.

Here’s a look at the states that tax what kind of retirement income.

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These 9 states tax Social Security benefits

Here are the nine states that do social security tax benefits:

• COLORADO
• Connecticut
• Minnesota
• mountain
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

If you live in one of these states, don’t be too alarmed. Several of the states above tax only the Social Security benefits of relatively high earners, and some only tax benefits above a certain threshold. So there’s a decent chance your Social Security benefits will be taxed lightly — or not at all.

These 34 states tax pension income

When it comes to retirement income, the news is not as good. Here, according to Kiplinger.com, are the 34 states — plus the District of Columbia — that tax retirement income:

• Arizona
• California
• COLORADO
• Connecticut
• Delaware
• District of Columbia
• Georgia
• Idaho
• Illinois
• Iowa
• Kentucky
• Louisiana
• Tomorrow
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• mountain
• Nebraska
• New Jersey
• New Mexico
• new york
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Rhode Island
• South Carolina
• Utah
• Vermont
• virgin
• West Virginia
• Wisconsin

Don’t hyperventilate just yet if you live in one of the states above, as some of the states exclude military pensions, government pensions or certain other pensions. Some of them only partially tax pensions. So if you live in one of these states, look at the specific rules for that state.

These 37 states tax IRA and/or 401(k) distributions

For many people, 401(k) accounts and IRAs provide another key type of retirement income. 37 states — plus the District of Columbia — tax such distributions:

• Alabama
• Arizona
• Arkansas
• California
• COLORADO
• Connecticut
• Delaware
• District of Columbia
• Georgia
• Hawaii
• Idaho
• Illinois
• Iowa
• Kentucky
• Louisiana
• Tomorrow
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• mountain
• Nebraska
• New Jersey
• New Mexico
• new york
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Rhode Island
• South Carolina
• Utah
• Vermont
• virgin
• West Virginia
• Wisconsin

Again, the news may not be as bad as it seems, as some of these states only do partial taxation.

The big picture

Before you stress about the possible taxation of your retirement income, be sure to consider the big tax picture. Remember that every state needs to collect some revenue to keep its government running — to pay for schools, courthouses, roads, and more. They can do this through property taxes, sales taxes, income taxes, or a combination of different taxes.

So while you may face some sort of tax on your retirement income, you may be free of property taxes or sales taxes. Consider your lifestyle — the value of your home, the amount of shopping you do, your income — and then you can compare which states would tax you more.

Also, while we’re on the subject of retirement income, make sure you’re preparing to receive enough to give you a comfortable, stress-free future. Most of us need to develop a solid overall retirement plan — and then stick to it. Keep in mind that retirement income can include, but is not limited to, side gigs, payouts from dividend-paying stocks and/or interest from CDs and bank accounts. It can also come from slowly selling off parts of your holdings in great stocks.