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States exempting a portion of pension income include: Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Oklahoma, South Carolina, Utah, Virginia and Wisconsin.
In Arizona, public pensions are exempt but pensions from other states are taxable at 2.59 - 4.54% depending on your income... so if you move from Michigan to Arizona for your retirement years, you pay state taxes where you would have been exempt elsewhere.ere in Michigan, our Social Security payments, and public pension payments are tax exempt.... so if you retired from Federal, State, or local government, you pay no taxes on your Social Security and pension income.