Related: 20 Inspiring Ideas to Make the Most of Your Retirement Bucket List
While WV moves away from the tax, Minnesota is actually a sleeper offender, taxing Social Security, pensions, and all forms of retirement income. The top income tax rate in the state is 9.85%, and the lowest is 5.35%, according to Kiplinger.
The Pension & Retirement Income Trap
No income tax doesn’t always mean no retirement income tax. Some states tax pensions or 401(k) withdrawals even with no broad income tax. California, for example, taxes retirement income, including private and public pensions plus 401(k) accounts, at up to 13.3%, but doesn’t tax Social Security benefits. StateByStateTax notes that the Golden State receives a poor rating for retirees.
On the plus side, one of those places they could migrate to is Michigan. Starting with the 2026 tax year, the Great Lakes State will have effectively phased out state income tax on most retirement and pension benefits, including defined-benefit pensions, IRA distributions, and other qualifying retirement income, reports Kiplinger.
Inheritance and estate tax isn’t something many retirees think about until it’s too late. You worked hard to leave something to your loved ones, and you want them to be able to use as much of it as possible.
Furthermore, Kiplinger reportd that Massachusetts estate taxes can jump as high as 16%, with an exemption of only $2 million for 2025, meaning many middle-class homeowners get caught.
Property Tax Is The Hidden Fixed-Income Killer
States like New Jersey and Illinois have property tax rates of 2.13% and 2.07%, respectively, which can hit a retiree hard. In fact, property taxes can completely negate income tax exemptions, making it expensive to stay retired in the state.
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Disclaimer: This article is for informational purposes only and does not constitute advice.
Sources
CNBC Select — "These 13 States Don't Tax Social Security, 401(k) Accounts, IRAs or Pensions"Kiplinger — "Retirement Taxes: How All 50 States Tax Retirees"Kiplinger — "The 8 States That Tax Social Security Retirement Income in 2026"StateByStateTax — "Retirement Tax by State 2026 — Best & Worst States for Retirees"SmartAsset — "Best States to Retire for Taxes (2026)"RetirementLiving.com — "Taxes by State 2026"Income Lab — "State Taxes in Retirement: The Complete Advisor Guide (2026)"Rocket Mortgage — "Property Tax Relief for Seniors"Hence then, the article about retirees are getting blindsided by these state tax laws is your state on the list was published today ( ) and is available on Parade ( Saudi Arabia ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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