Wyoming Is One of 12 States That Doesn’t Tax Retirement
Some people choose to live where the taxes are lower. This is especially true when it comes to retirement. Many people who retire choose to move to where the least amount of their money will be taken either through cost of living or taxes.
According to AARP, 9 of those states that don't tax retirement plan income simply have no state income taxes at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Of the remaining 3 — Illinois, Mississippi and Pennsylvania — they choose not to touch from 401(k) plans, IRAs or pensions. Alabama and Hawaii will not touch pensions but do tax distributions from 401(k) plans and IRAs.
Just because a person does not pay retirement income doesn’t mean that their state doesn’t tax some of their retirement income. 27 states tax some, but not all, retirement or pension income.
One of the reasons so many retirees move to states like Florida has been cheap land and no state income tax, plus no taxes on other forms of retirement income.
While there are those who retire to Wyoming, it's probably the winter climate that keeps many of them away from the state. It's not just the low taxes that attract those looking to retire, it's Wyoming's low cost of land and inexpensive living costs.
Wyoming has been looking for a way to diversify it's economy. As Florida has found out, retirement is an industry in itself and can help the state grow economically.