How Texas taxes retirement income
Texas has no state income tax, so no retirement income is taxed at the state level: not Social Security, not pensions, and not 401(k) or IRA withdrawals. This makes Texas one of the more tax-friendly states for retirees. Federal income tax still applies.
Retirement income tax in Texas, at a glance
| Income type | Taxed by Texas? |
|---|---|
| Social Security | No |
| Pensions | No |
| 401(k) / IRA withdrawals | No |
| Estate / inheritance tax | None |
Does Texas tax Social Security benefits?
No. Texas does not tax Social Security benefits. That follows automatically from having no state income tax.
Does Texas tax pensions and 401(k) or IRA withdrawals?
No. With no state income tax, Texas does not tax pension income or withdrawals from 401(k) plans and IRAs. You still owe federal tax on withdrawals from traditional (pre-tax) accounts.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Texas taxation of retirement income (Social Security, pensions, 401(k)/IRA): Texas Department of Revenue / Taxation.