Some states exempt various forms of retirement income, with eight states having no income tax at all. Illinois, Iowa, Mississippi, and Pennsylvania are considered the most tax-friendly for retirees. Some states do not tax Social Security income or most military retirement pay, and fifteen states exempt pension income. Arkansas, Illinois, Iowa, Mississippi, New Hampshire, Pennsylvania, and South Carolina are examples of states that are tax-friendly to retirees. Arkansas exempts up to $6,000 per year from pension plans and IRA distributions, while Illinois exempts pension income, Social Security benefits, and military retirement pay. Iowa recently updated its laws to be more retirement-friendly, no longer taxing pension, 401(k), or IRA income for residents over age 55. Mississippi spares retirement distributions, pension income, Social Security income, and military retirement pay from state taxes. New Hampshire doesn’t tax Social Security or pension income, but taxes retirement account distributions that qualify as interest or dividends. Pennsylvania has no state taxes on Social Security, pension income, or retirement plan distributions. South Carolina does not tax Social Security income and offers exemptions on retirement plan income for those over age 65. Taxes on retirement income vary by state, with some offering significant tax breaks on Social Security, 401(k) withdrawals, IRA distributions, and pensions. Consider speaking with a financial advisor to find the right plan for you.

Read more at Yahoo Finance: States That Let You Keep Every Dollar You Earn