Federal taxes on pensions by state

Pensions aren't as common as they used to be. Over the past few decades, there’s been a significant shift away from traditional pension plans, particularly in the private sector.

For example, data show that about two years ago, only about 15% of private sector workers had access to defined benefit plans.

How much of your pension income is taxable

(Most employees now rely on 401(k)s and other similar retirement savings options.)

However, for those who have them (around 30% of older adults in the U.S. reportedly rely on pension income), pensions can provide a steady and reliable source of funds.

This can help to cover everyday expenses and enhance financial security during retirement.

Are pensions taxable?

When it comes to taxes, pensions can be a bit tricky. Generally speaking, pension income is taxable at the federal level, so you have to account for that when planning your retirement budget.

For more information, see How the IRS Taxes Retirement Income.

However, as Kiplinger reports, taxes in retirement vary from state to state. For instance, some states tax pension incom

how is pension income taxed federally

how is retirement income taxed