Personal income tax at the state level can be a very important part of some retirees' expenses. Income Lab strives to model all state personal income tax structures that are likely to affect retirees and workers. This includes correctly modeling tax rates, thresholds, deductions, and exemptions, especially as they relate to retirement income.

While we strive to keep current with all relevant state tax laws and regulations, we may not cover certain more obscure or less relevant issues. For example, Idaho offers a substantial exemption on “Idaho capital gains” on the sale of cattle and other livestock. Since few people will have livestock sales in their plans, and there are other ways of marking income items in the software as exempt from state (or even Federal) taxes, this feature of Idaho income tax is not covered in Income Lab software.

Furthermore, although Income Lab makes every effort to keep up-to-date on developments in state taxes, and even to model future planned changes in state income tax regimes, we may not always have the latest news items modeled in our software. That isn't necessarily because we just missed something (although that's always possible too!). Instead, it's typically because there is a lag between when a new tax law is proposed in or passed by a state government and when the regulations are available in enough detail that they can be included in software. Often, legislation alone isn't enough: we need regulations and tax forms in order to understand the actual math behind a change in tax law. Sometimes legislation is ambiguous or even self-contradictory, and so courts and bureaucrats need to sort things out to make it clear. Furthermore, you may hear about possible changes that are being considered by a state legislature. Those proposals, even if they are likely to pass, will not be included in Income Lab until they are firmly established in law and clear enough in structure to be put in computer code.

That said, if you know of a state tax update that is not yet implemented in Income Lab, please let us know!

Typically, Income Lab software is updated every year on January 1 with all of the new year's Federal values. State values are also updated as quickly as possible. However, states are often much slower than the Federal government to update forms and published regulations. Often, a year's tax forms will not be available until the beginning of the next year. However, if the current year's values are firmly available, Income Lab will include those values in its state tax modeling.

State-by-State Tax Models

The following 8 states have no personal income tax:

• Alaska
• Florida
• New Hampshire
• Nevada
• South Dakota
• Tennessee
• Texas
• Wyoming

Furthermore, Washington has no personal income tax on ordinary income. However, Income Lab does model Washington state's tax on non-real-estate capital gains. (See Washington in the state-by-state details below for more on this.)

Below you'll find a state-by-state summary of state income taxes in each state, as modeled in Income Lab software. Because some states' systems are quite complex, these summaries may not cover everything in detail, even if it is covered in the software's plan calculations.

Note also that many states exclude certain pensions (e.g., military or government pensions) from taxation. To model this in Income Lab, enter the pension as an item in the “Other Income” section of the plan and check the box for “Exempt from state tax”.

In the state-by-state guide below, we do not detail which pensions are excluded from tax in each state. However, we do detail whether the state taxes Social Security income, retirement income (withdrawals from IRAs and 401(k)s), the structure of the tax system (flat vs progressive), and whether the state's tax values are adjusted automatically over time for inflation. If values are not adjusted for inflation, this leads to “bracket creep”, where, due to inflation over time, more and more income becomes taxable.

State-by-State Guide

Alabama (AL)

Other notes:

• AL allows deduction of federal taxes.
• Standard deduction is phased out (down to a floor) for income above a threshold. 

Arkansas (AR)

Other notes:

• AR has a “two column” tax system where each spouse's income is figured against the same thresholds and rates.
• Above an income threshold, a smaller set of “high income” tax rates and thresholds applies.

Arizona (AZ)

California (CA)

Other notes:

• CA has a “Mental Health Services Act” (MHSA) tax of 1% on income over $1 million (not adjusted for inflation).
• CA's exemption is structured as a tax credit and is phased out above certain thresholds.

Colorado (CO)

Other notes:

• CO ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.
• Thresholds for reduction of retirement income exclusion under age 65 are not adjusted for inflation.
• Retirement income exclusion amounts are not adjusted for inflation.

Connecticut (CT)

Other notes:

• CT has a complex set of credits and exemptions with phaseouts based on income level.

Delaware (DE)

Other notes:

• DE has a $2k/person age 60+ additional deduction for those with low earned income.
• DE follows a “two column” method for joint returns, with each spouse's income taxed separately at the same rates and thresholds.

District of Columbia (DC)

Georgia (GA)

Other notes:

• GA's retirement income exclusion covers most types of income (not just retirement account withdrawals/pensions).
• Retirement exemption is $35k/person age 62-64.

Hawaii (HI)

Other notes:

• HI is in the middle of a major tax overhaul, with bracket thresholds adjusting in 2-year increments, with the effect of applying tax rates to much higher thresholds by 2030.

Iowa (IA)

Other notes:

• IA ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.

Idaho (ID)

Other notes:

• ID ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.
• ID has a “food tax credit” that is higher for ages 65+.

Illinois (IL)

Indiana (IN)

Other notes:

• IN has a complex set of exemptions including additional age 65+ exemptions.

Kansas (KS)

Kentucky (KY)

Other notes:

• KY has an additional age 65+ tax credit

Kansas (KS)

Louisiana (LA)

Other notes:

• LA did not previously adjust values for inflation, but will do so starting in 2028.

Massachusetts (MA)

Other notes:

• MA tax is billed as a “flat” 5% rate, but with the addition of a 4% additional “millionaires tax” income above $1 million (adjusted for inflation since 2023), it is now a progressive tax rate state.

Maryland (MD)

Other notes:

• MD has an additional $100k/person income exclusion for those age 100+.

Maine (ME)

Other notes:

• ME deductions and exemptions are reduced when income is above a threshold.

Michigan (MI)

Other notes:

• MI has an alternative $20k exclusion of all income types for those age 67+ and an investment income exclusion for those born before 1946.

Minnesota (MN)

Other notes:

• MN's deduction is reduced when income is above a threshold.
• MN has a $6k additional deduction until 2028 in the spirit of the 2025 OBBBA “Senior Bonus”.

Missouri (MO)

Other notes:

• MO uses a “two column” method for joint taxes, applying the same rates and thresholds to each person's income.
• MO does not tax capital gains.
• There is a proposal in MO to switch to a flat 4% tax and 100% retirement income exclusion, but this has not yet been implemented.

Mississippi (MS)

Other notes:

• MS is in the middle of a years-long reduction in its flat tax rate.

Montana (MT)

Other notes:

• MT did not previously adjust thresholds for inflation but will begin to do so in 2027.
• MT has a separate capital gains tax system that is similar to the Federal system (where ordinary income can push capital gains income into higher brackets).
• MT ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.

North Carolina (NC)

North Dakota (ND)

Other notes:

• ND ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.
• ND excludes 40% of capital gains from taxation.

Nebraska (NE)

New Jersey (NJ)

New Mexico (NM)

Other notes:

• NM ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.
• NM excludes from taxation the lesser of $1000 or 40% of capital gains.
• NM excludes 100% of income for people age 100+.

New York (NY)

Ohio (OH)

Other notes:

• OH exemption is reduced above certain thresholds.
• OH offers a $200 retirement tax credit and a $50 senior tax credit that are phased out above certain thresholds.

Oklahoma (OK)

Other notes:

• OH exemption is reduced above certain thresholds.
• OH offers a $200 retirement tax credit that is phased out above certain thresholds.

Oregon (OR)

Other notes:

• OR allows deduction of Federal income tax (with limitations).
• Personal exemptions are reduced above certain income thresholds.
• OR offers a credit of 9% of retirement income, reduced above an income threshold.

Pennsylvania (PA)

Rhode Island (RI)

Other notes:

• RI deductions and exemptions are phased out above a threshold.
• RI treats IRA income differently than withdrawals from other retirement accounts.

South Carolina (SC)

Other notes:

• SC excludes 44% of capital gains from taxation.
• SC offers an alternative $15k/person age 65+ reduction in income, net of already excluded retirement income.
• SC ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.

Utah (UT)

Other notes:

• UT ties taxable income to Federal Taxable Income, thus incorporating standard or itemized deductions from the Federal level and other deductions such as the “Senior Deduction” from the 2025 OBBBA.

Virginia (VA)

Other notes:

• Age-based deductions available for age 65+ and age 83+, reduced above certain income thresholds.

Vermont (VT)

Other notes:

• Up to $5,000 of capital gains may be excluded.
• Minimum tax of 3% of Federal AGI if AGI is over $150,000.

Wisconsin (WI)

Other notes:

• WI excludes 30% of capital gains from taxation.
• Minimum tax of 3% of Federal AGI if AGI is over $150,000.
• $5k retirement income excludable age 65-66, reduced for income above certain thresholds.

Washington (WA) - Capital Gains Only

Other notes:

• Only non-real-estate capital gains are taxed.
• Threshold for taxability is $278,000.

West Virginia (WV)