The best states for teacher retirement in 2026
20 states take nothing from a teacher's pension. These ten pay the most on the way in as well — because a tax-free retirement funded by a low salary is not the bargain it looks like.
Ranking states for retirement usually means ranking their income tax. That is the easy half. The state that taxes your pension at zero can still be the wrong answer if it paid you less for thirty years, or if its teachers never paid into Social Security and so retire with one cheque instead of two.
So the ranking below starts with the states that take nothing from the pension, then orders them by average teacher salary — and names the trade-off on each.
1
New York
No pension tax
State income tax
Yes, pension exempt
Avg. teacher salary
$98,655
Taxes income generally, but exempts public pension income. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
2
Washington
No pension tax
Avg. teacher salary
$96,589
Keeps every dollar of the pension. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
3
Massachusetts
No pension tax
State income tax
Yes, pension exempt
Avg. teacher salary
$93,554
Social Security
Not covered
Taxes income generally, but exempts public pension income. Teachers here are not covered by Social Security, so the pension carries the whole load — a real cost against the tax saving. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
4
New Jersey
No pension tax
State income tax
Yes, pension exempt
Avg. teacher salary
$84,974
Taxes income generally, but exempts public pension income. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
Avg. teacher salary
$81,450
Social Security
Not covered
Keeps every dollar of the pension. Teachers here are not covered by Social Security, so the pension carries the whole load — a real cost against the tax saving. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
6
Pennsylvania
No pension tax
State income tax
Yes, pension exempt
Avg. teacher salary
$79,078
Taxes income generally, but exempts public pension income. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
7
Illinois
No pension tax
State income tax
Yes, pension exempt
Avg. teacher salary
$78,495
Social Security
Not covered
Taxes income generally, but exempts public pension income. Teachers here are not covered by Social Security, so the pension carries the whole load — a real cost against the tax saving. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
State income tax
Yes, pension exempt
Avg. teacher salary
$75,860
Taxes income generally, but exempts public pension income. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
Avg. teacher salary
$74,812
Social Security
Not covered
Keeps every dollar of the pension. Teachers here are not covered by Social Security, so the pension carries the whole load — a real cost against the tax saving. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
10
New Hampshire
No pension tax
Avg. teacher salary
$69,432
Keeps every dollar of the pension. Teachers here are also covered by Social Security, so the pension is one leg of two. Retire with a $45,000 pension and the state takes nothing, against $4,185 a year in a high-tax state.
Why a zero rate is not the whole story
A pension exempt from state tax is worth roughly 5–11% more than the same pension in a high-tax state — real money, every year, for life. But it is one term in a longer sum. Salary sets both what you contribute and the final average salary the benefit formula multiplies, so a career in a higher-paying state can produce a bigger after-tax pension even where that pension is taxed.
The second term is Social Security. In several of these states teachers are outside the system for their teaching work, which means no Social Security cheque from those years at all. That gap is usually larger than the tax saving that attracted you.
Moving after you retire
Retirement is the one moment when changing states is genuinely easy: no job to move, no school year to finish. Your pension follows you and is taxed by where you live, not where you earned it — which is why the same pension is worth thousands more in one state than another.
Cost of living, family and healthcare access decide most moves, and they should. This list only prices the tax half so you can weigh it against the rest.
Work out your own number
Educational estimates only, not tax advice. Figures come from our open dataset; see Methodology for how each is derived. Last built 2026-09-02.