Which states tax public pensions, and what happens if I move?

Rules checked October 18, 2026, against oregon.gov, dor.wa.gov, tax.idaho.gov, azdor.gov, tax.nv.gov and ftb.ca.gov

The basic rule: where you live

States tax their residents on all of their income, wherever it comes from. That includes a pension earned in another state. The flip side is a federal law, 4 U.S.C. 114 (federal law: limitation on state income taxation of certain pension income). It says no state may tax the "retirement income" of someone who is not a resident (or domiciliary) of that state.

The law's list of retirement income covers the plans public employees have: governmental pension plans, 457 deferred compensation plans, 403(b) plans, 401(a) plans and IRAs. So if you worked 30 years for an Oregon school district and retire to Nevada, Oregon cannot tax your PERS pension or your 457 payouts. California says the same in its own guidance: it does not tax retirement income received by a nonresident after December 31, 1995 (California FTB: Publication 1005, Pension and Annuity Guidelines).

Residency is decided by each state's own rules. Spending winters somewhere warm does not by itself make you a resident there, and keeping a home, voter registration or driver's license in your old state can mean you are still a resident of it. If you split your year, ask both states' revenue departments how they decide.

How Oregon taxes public pensions

Oregon taxes the pensions of its residents, including PERS, FERS and pensions from other states. According to the Oregon Department of Revenue: Personal income tax:

• Social Security is not taxed. Oregon doesn't tax Social Security or Railroad Retirement Board benefits.
• Moving in: once you become an Oregon resident, your pension is taxable in Oregon, no matter which state paid it.
• Federal pension subtraction: if you get a U.S. government pension (such as CSRS or FERS) for federal service before October 1991, you may be able to subtract all or part of it on your Oregon return. The details are in Publication OR-17.
• Retirement income credit: a small credit for lower-income retirees.

The Oregon retirement income credit

The Department of Revenue's Publication OR-PIT-VET lists these conditions. You must:

• be 62 or older at the end of the tax year,
• have household income under $22,500 ($45,000 on a joint return),
• get less than $7,500 a year in Social Security and Tier 1 Railroad Retirement benefits ($15,000 on a joint return), and
• have retirement income that Oregon taxes.

A 2025 legislative review of the credit describes it as 9% of qualifying pension income, with income limits that are not adjusted for inflation. Because of those low limits, most career public employees with a full pension will not qualify. Check the current year's OR-17 to confirm the credit is still available for the year you file.

Oregon withholding

Oregon PERS withholds both federal and Oregon tax from Tier One and Tier Two pensions at standard rates unless you file a W-4P. If you live outside Oregon, you must send PERS a W-4P to stop Oregon withholding (Oregon PERS: pre-retirement guide).

The PERS tax remedy and moving away

Before 1991, Oregon did not tax PERS pensions. When the state started taxing them, the courts required a "remedy," so the Legislature directed PERS to raise some Tier One benefits to make up for the new tax (Oregon PERS: Tax remedy information).

Who gets it

You must be a Tier One member who established PERS membership before July 14, 1995, be an Oregon resident for income tax purposes, and either have at least 10 years of creditable service or have benefits from service before October 1, 1991. Tier Two and OPSRP members do not get it. PERS pays the higher of two formulas, and the maximum is 9.89% of the benefit.

Why moving matters

Senate Bill 822 (2013) ended the tax remedy for PERS benefit recipients who don't pay Oregon income tax because they live elsewhere. PERS checks residency each year using Department of Revenue records. An Oregon mailing address on file with PERS is not enough. If the records show you are not an Oregon resident, the increase is removed for the coming year, and PERS sends a letter in January when it is removed or restored. You can also certify your residency through Online Member Services or the PERS Residency Status Certification form. PERS must receive it by December 15 for it to count for the next year (Oregon PERS: Tax remedy FAQ).

Your PERS statement shows whether your benefit includes a tax remedy amount. Ask PERS for the figure before you move.

Common moves: state by state

This table covers states that Pacific Northwest public retirees often move to. Tax laws change; check each state's revenue department for the year you move.

Washington

Washington does not currently have an individual income tax. The 2026 Legislature passed Senate Bill 6346, which creates a 9.9% tax on annual adjusted gross income over $1 million, starting January 1, 2028 (Washington DOR: Income tax). Few retirees will reach that threshold, but a very large one-time lump sum or sale could. Washington also has a separate capital gains tax (Washington DOR: Capital gains tax).

Idaho

Idaho taxes the pensions of residents and part-year residents, and does not tax Social Security (Idaho State Tax Commission: Seniors and retirees). The Idaho Retirement Benefits Deduction covers only a few pension types: federal CSRS and Foreign Service pensions (FERS is not listed), military retirement, and certain Idaho firefighter and police pensions. You generally must be 65, or 62 and disabled, and the maximum is recalculated each year (Idaho State Tax Commission: Retirement benefits deduction). An Oregon PERS or Washington DRS pension is not on the list.

Arizona

Arizona taxes pensions but lets you subtract up to $2,500 of a pension from the U.S. government or an Arizona state or local government. Pensions from other states do not qualify, so an Oregon or Washington pension gets no subtraction. Social Security is not taxed (Arizona DOR: 2025 Form 140 instructions).

Nevada

Nevada does not impose a state income tax on individuals (Nevada Department of Taxation: Income tax in Nevada). It does have sales and property taxes.

California

California taxes residents on all income, including pensions earned in other states. It does not tax Social Security (California FTB: Publication 1005).

Before you move

• Look at total taxes, not just income tax. States without an income tax often rely more on sales or property taxes.
• Update your withholding. Send your pension plan a new W-4P (and the state form if the new state needs one) so your old state stops withholding.
• Update your address with your plan. For Oregon PERS, also check your residency status for the tax remedy.
• Plan the year of the move. In the year you move, you may file part-year returns in both states, each taxing income received while you lived there.
• Check health coverage. Retiree health plans and Medicare Advantage plans can depend on where you live. See health insurance before Medicare.

What to do next

1. Ask PERS about your tax remedy. If you are Tier One, find out how much of your benefit is the tax remedy before you decide to move.
2. Run the numbers for both states. Use each state's tax forms or calculator with your expected pension and Social Security.
3. Read how federal tax works. State tax sits on top of federal tax; see how pensions are taxed.
4. Build your budget. Our retirement budget guide shows how taxes fit into monthly spending.

General information, not advice. We aren't part of any state revenue department or retirement system. For your own situation, ask the revenue department of each state involved, your retirement system, or a tax professional.