As of 2015, states that do not tax pension income include Illinois, Pennsylvania and Mississippi, according to Investopedia. These states do not charge any tax-deferred investment earnings. Tax levies on pension incomes depend upon the type and amount of income and varies from state to state.
As of 2015, Washington, Texas, South Dakota, Alaska and Nevada do not tax any type of retirement income, explains Investopedia. Other states that do not impose taxes on income include Tennessee, New Hampshire, Wyoming and Florida.
Alabama, Kansas, Hawaii and New York do not tax pensions of state workers, including military retirees. Other states that do not tax pension from the government include Michigan, Louisiana and Massachusetts. Connecticut imposes tax on half the earnings for persons who were in the military, according to Kiplinger.
Certain states, including New Mexico, Utah, Virginia, West Virginia and Minnesota, only levy taxes on part of the pensions, explains Investopedia. Delaware and Georgia also tax only sections of the income. Other states, such as Kansas, levy taxes on private pension income but not public pensions.
Retirees who intend to avoid taxation on their pension should avoid the states of Nebraska, Connecticut, Rhode Island, Vermont and California. These states tax pension incomes at relatively high rates.