You’ve worked hard all your life, and now you’re retired (or will soon retire). Unfortunately, there’s a pretty good chance that Uncle Sam is going to take a cut of your 401(k), traditional IRA or pension income. But what about your state? Will it take a bite out of your retirement income, too?
Most states tax at least a portion of retirement income (not counting Social Security benefits). Your state might offer some tax breaks, but those breaks usually have limitations based on your age and/or income. Twelve states, however, completely exempt the most common types of retirement income–401(k)s, IRAs and pensions–from taxation. That’s a huge plus for retirees living in those states. Take a look at the list.