Retirees in USA

Live, Laugh, Retire: Real Insights for American Seniors

12 States That Won’t Touch Your Pension, 401(k), or Social Security

· By Retirees in USA Editorial Team · RETIREMENT INCOME
Close-up of hands holding a mug over financial papers, representing security.
Reviewing your 401(k) statement over a hot cup of coffee is stress-free in Illinois.

Illinois

Illinois’ varied economy, dynamic metropolis of Chicago, and lush farmlands make it an attractive retirement income taxation state. Despite its financial woes, Illinois continues to simplify taxes for seniors, making it a more appealing retirement destination.

Illinois is one of the few states that exempt entire retirement income. Illinois retirees don’t pay state income taxes on Social Security, pensions, or 401(k)s. Illinois’s approach lets retirees extend their savings.

This area provides extra tax incentives for seniors than retirement income exemption. Illinois exempts prescription and non-prescription medications, eligible food, and medical equipment from sales tax. This may save retirees a lot as health care and food are big expenditures.

However, Illinois retirees should be aware of some tax exclusions. The state exempts retirement income but taxes other income at 4.95%. Despite tax-friendly retirement income, Illinois has substantial property taxes. Retirees may be affected by county property tax rates.

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Written by

Retirees in USA Editorial Team

The Retirees in USA Editorial Team is dedicated to helping American seniors and pre-retirees navigate every stage of retirement with confidence and clarity. Our content is thoroughly researched using authoritative sources — including SSA.gov, Medicare.gov, AARP, the National Council on Aging, IRS.gov, and CDC.gov — and reviewed for accuracy, practical value, and relevance before publication. We cover healthy aging, retirement income, Medicare, Social Security, senior lifestyle, and everything in between. Our mission is simple: give real people real answers about the retirement questions that matter most. All content on Retirees in USA is editorially reviewed and verified before going live.
See our Editorial Policy for full details on how we work.

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10 comments on “12 States That Won’t Touch Your Pension, 401(k), or Social Security”

  4. all the rest of the states should be tax free for seniors on social security ny nj cal are hard to live in because of high prices

    Reply

  6. You know, I have always heard people gripe about Tennessee taxing food. Oh. well. You don’t have a state income tax and things are relatively cheaper here. And you have to pay for government one way or another, right? Give to Caesar what is Caesar’s…

    Reply

  7. This site is so hard to navigate. It always has interesting subjects so you click on but there are so many adds that you can never actually find the article. Which I will now unfollow.

    Reply

  8. I just moved from a state that won’t hurt my SS income to a state who may hurt me? I don’t make a whole lot so I’m considered poor. It could possibly change in my future and I see I will be hurt by my new state. Wonderful. I hate the state I left and returned to my birth state and they will hurt me every chance they get. Thanks for keeping me happy in my senior years, NOT! 😠

    Reply

  9. Is it really true about “Texas does not tax income. All income—including Social Security, pensions, and 401(k) and IRA distributions—is tax-free. This may help retirees save more money”? I think this is not fact, cannot talk about other states, I leave in Texas.

    Reply

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