National Association of State Retirement Administrators

Economic Effects of Pensions

Recent studies reveal that public pension benefits have positive effects on local and state economies. In 2019, state and local government retirement systems in the U.S. distributed $155 billion more in benefits than they received in taxpayer-funded contributions. Personal income from state and local government pensions exceeds the personal income derived from the nation's farming, fishing, logging, and hotel/lodging industries combined. The expenditure of public pension benefits results in an economic impact that reaches every city and town of every state.

State and Local Studies

Analyses of the impact of public pension payments on their state's economy:

Taxation of Retirement Income

Forty-three states tax individual incomes, and most provide full or partial exclusions for retirement income. Retirement income is generally received in the form of pension benefits for state or local or private sector service, Social Security, or federal government or military benefits. Tax exclusions for retirement income vary among states and are influenced by factors including age, residency while receiving benefits, and marital status, among others. A compilation of state policies governing exclusions for retirement income can be accessed via the link below. 

Other Resources