State tax on early 401(k) and IRA withdrawals, state by state
The federal rules are the same everywhere; the state bill on the same withdrawal ranges from nothing to a second penalty, depending on where you live and how old you are.
California: state tax on this withdrawal
$1,000
California taxes the withdrawal as income and adds its own 2.5 % tax before 59½ (form FTB 3805P), on top of the federal 10 %.
| Excluded by the state | $0 |
| Taxed by the state | $40,000 |
| Rate used | type your rate |
| State early-distribution tax | $1,000 |
Worked out by Radif Partners · How we calculate · figures read on irs.gov and healthcare.gov · not personal financial advice
Most states start from federal adjusted gross income, so a 401(k) or IRA withdrawal is taxed again at the state rate. What changes from one state to another is what they subtract and at what age. Illinois subtracts payouts from qualified plans and IRAs at any age, early ones included. Iowa excludes retirement income entirely from the year you are 55 on December 31. Colorado subtracts up to $20,000 a person from 55, New York up to $20,000 only after 59½, Georgia from 62, New Jersey from 62 with an income limit. Pennsylvania and Mississippi exempt retirement income only once the plan's retirement conditions are met, so an early payout is taxable. California goes the other way and adds a 2.5 % tax of its own on early distributions, on top of the federal 10 %. Washington, Texas, Florida, Nevada, South Dakota and Alaska tax neither wages nor withdrawals. The calculator above applies each rule as we read it on the state's revenue department site.
Eleven states where age changes the answer
We chose the states where the treatment of an early withdrawal differs from a plain "taxed like wages": an exclusion that starts at a given age, a rule tied to the federal penalty, a state penalty, or no income tax at all with a separate tax on investment gains. Each rule below was read on the state's own site; the source and the tax year are on each state page.
| State | Exclusion of retirement payouts | Early payout (before 59½) | Rate on file |
|---|---|---|---|
| California | none | taxed + 2.5 % state tax | graduated |
| Colorado | from 55 to 64: $20,000; from 65: $24,000 | taxed | graduated |
| Georgia | from 62 to 64: $35,000; from 65: $65,000 | taxed | 4.99 % |
| Illinois | any age: all | excluded | 4.95 % |
| Iowa | from 55: all | taxed | 3.80 % |
| Mississippi | from 59½: all | taxed | 4.00 % |
| New Jersey | from 62: $75,000 | taxed | graduated |
| New York | from 59½: $20,000 | taxed | graduated |
| Pennsylvania | from 59½: all | taxed | 3.07 % |
| South Carolina | any age to 64: $3,000; from 65: $10,000 | taxed | graduated |
| Washington | no income tax | not taxed | none |
Same withdrawal, same age, different states
Take $40,000 from an old 401(k) at 52, with the federal 10 % due. In Illinois the state subtracts it: $0 of state tax. In Iowa, which waits until 55, it is taxed at the flat rate: $1,520. In Pennsylvania, where an early payout is taxable above the contributions already taxed, up to $1,228 at 3.07 %. In Georgia, before 62, $1,996. Four years later, at 56 and under the rule of 55, the Iowa bill drops to $0 while the Georgia bill does not change. California's own early-distribution tax alone is $1,000 on that withdrawal, before its income tax.
The same withdrawal in another state
Iowa: state tax on this withdrawal
$1,520
| Excluded by the state | $0 |
| Taxed by the state | $40,000 |
| Rate used | 3.80 % |
| State early-distribution tax | $0 |
States without an individual income tax
Six states that we could confirm on their own official sites impose no individual income tax in 2026: Alaska, Florida, Nevada, South Dakota, Texas, Washington. A withdrawal there costs only the federal tax and, before 59½ without an exception, the federal 10 %. Washington taxes large long-term capital gains through a separate excise, but money in 401(k), 403(b), 457(b) and IRA accounts is exempt from it; the Washington page gives the threshold and the income tax voted for 2028. New Hampshire, Tennessee and Wyoming are often listed with them; their revenue sites could not be read when this page was written, so we do not state their rules here.
How states read the federal penalty
Several states tie their exclusion to the federal treatment. Colorado and South Carolina leave out a distribution that the IRS treats as premature; Pennsylvania exempts an IRA payout only when no federal early-withdrawal penalty applies; Mississippi taxes a distribution reported on federal Form 5329. In those states an exception to the federal 10 %, such as the rule of 55 or a 72(t) series, can also change the state bill. The calculator has a "Federal 10 % applies" switch for that reason.
Exclusions per person, not per household
Where a state caps its exclusion, the cap usually applies to each spouse on that spouse's own retirement income. Colorado computes its subtraction separately for each spouse; Georgia's exclusion is per person, and each spouse must qualify on age; New York's $20,000 applies to each spouse who is 59½ and receives qualifying payments. A couple therefore gets the most from these exclusions when both have retirement accounts in their own name. New Jersey works differently: its retirement exclusion is a household cap that depends on the filing status, and it disappears when New Jersey income passes $150,000. Two rules of thumb follow. First, a withdrawal taken from the older spouse's IRA may be excluded when the same amount from the younger spouse's IRA is not. Second, the age that counts is often the age at the end of the tax year, as in Iowa (December 31), so a withdrawal in January of the year you turn 55 can already qualify there. The state pages give the exact wording each state uses.
Moving before the withdrawal years
A withdrawal is generally taxed by the state where you live when you receive it, which is why some early retirees time a move before their largest withdrawal or conversion years. A move is a life decision, not a tax trick: property tax, sales tax and the cost of health insurance differ just as much, and residency rules are strict about where you really live. The state pages give the facts for each state; they do not recommend one.
What the comparison leaves out
- Graduated rates: for California, New York, New Jersey, Colorado and South Carolina, type your own marginal rate; the 2026 brackets of several of them were not yet published when we read their sites.
- Local income taxes, such as those of some cities and counties.
- States not listed: their rule is usually "taxed like wages", but we only publish what we have read on the state's own site.
Federal tax on the same withdrawal is on the 401(k) withdrawal tax page.