Partly taxed
How Massachusetts taxes retirement income
Massachusetts does not tax Social Security. It also exempts pensions from contributory government plans of the Commonwealth and its cities and towns, such as the Massachusetts Teachers’ Retirement System and the State Employees’ Retirement System, along with federal civil service pensions and military retired pay. Survivor benefits from Massachusetts plans are exempt too.
Pensions from other states, company pensions and withdrawals from 401(k), 403(b), 457(b) and IRA accounts are taxed at the flat 5% rate, with a 4% surtax on income above about $1 million. Massachusetts taxed your own contributions to most plans when you made them, so you can recover that amount tax-free before the rest is taxed.
Most Massachusetts teachers do not have Social Security from teaching, so the pension exemption covers most of their retirement income. A retired teacher with a $55,000 MTRS pension pays no Massachusetts income tax on it.
Questions
Does Massachusetts tax MTRS and state pensions?
No. Massachusetts state and local contributory pensions are exempt.
Does Massachusetts tax pensions from other states?
Generally yes, at 5%.
Does Massachusetts tax Social Security?
No.