Roth IRA state taxes almost never come due. If your withdrawal is a qualified distribution under federal rules, it’s excluded from your federal adjusted gross income, and because nearly every state builds its income tax on top of that federal number, the money never enters the state calculation either. The situations that do generate a state tax bill are narrower: early withdrawals that reach the earnings layer, Roth conversions, and the occasional inherited account that hadn’t been open five years.
Why Qualified Distributions Escape State Tax
Federal law excludes a qualified Roth distribution from gross income entirely.1Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs A distribution is qualified when two conditions are met: the account has been open at least five tax years, and the withdrawal happens after you turn 59½, become disabled, or pass away with the money going to a beneficiary.
Most states with a personal income tax start their calculation from your federal adjusted gross income. Because a qualified Roth distribution never appears in that number, it never appears on your state return. You don’t file a special state exclusion or deduction. The money simply isn’t part of the income your state can tax.
A handful of states use fixed-date conformity, adopting the federal code as of a specific past date rather than tracking changes automatically. The core Roth provisions in Section 408A have been stable for decades, so this hasn’t created gaps for qualified distributions in practice.
States With No Income Tax
If you live in one of the nine states without a personal income tax, the question doesn’t come up at all. Those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire phased out its former tax on interest and dividend income at the end of 2024, so from tax year 2025 forward it imposes no income tax of any kind.
Washington has a separate capital gains tax on certain high-value investment sales, but it doesn’t apply to retirement account distributions. Roth IRA withdrawals are distributions, not capital gains events, regardless of how a state treats investment income.
When States Do Tax Roth Withdrawals
State tax enters the picture when a withdrawal isn’t qualified. If you pull money from a Roth IRA before satisfying both the five-year rule and the age requirement, the earnings portion becomes federally taxable, and from there it flows into your state return.
The Ordering Rules Protect Most Early Withdrawers
Roth IRA withdrawals come out in a fixed sequence, and each layer must be fully exhausted before the next one begins.2eCFR. 26 CFR 1.408A-6 – Distributions Regular contributions come out first. They are always tax-free and penalty-free at any age, because you already paid tax on that money before it went into the account. Conversion and rollover amounts come out second, on a first-in, first-out basis, with the taxable portion of each conversion coming out before the nontaxable portion. Earnings come out last, and this is the only layer that can trigger both income tax and the federal 10% early withdrawal penalty.
This ordering matters. If you contributed $50,000 over the years and your account is now worth $70,000, you can pull out up to $50,000 without any federal or state income tax, even before 59½.
How the Earnings Portion Gets Taxed
Once a withdrawal reaches the earnings layer, the taxable amount shows up on your federal return and flows into your state calculation. You report it on IRS Form 8606, which tracks your Roth IRA basis and determines how much of any distribution is taxable.3Internal Revenue Service. Instructions for Form 8606 Most states apply their standard income tax rate to that amount.
The federal 10% early withdrawal penalty under Section 72(t) is a separate charge on top of ordinary income tax.4Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts Most states don’t stack a state-level penalty on top; they just tax the earnings as ordinary income. A small number do add a state penalty, but that’s the exception.
Roth Conversions Generate State-Taxable Income
Converting a traditional IRA to a Roth IRA is a taxable event at the federal level. The converted amount counts as ordinary income for the year of the conversion. Because conforming states start with federal AGI, that conversion income flows straight into your state return.
A large conversion can push you into a higher state bracket for the year on top of the federal bill. If you’re weighing a conversion, the state income tax cost is a real line in the analysis, particularly in states with high marginal rates. Residents of no-income-tax states avoid this cost entirely, which is one reason conversion planning is especially attractive for retirees who have already moved to one.
Each conversion also starts its own five-year clock. If you withdraw converted funds within five years and before 59½, the 10% early withdrawal penalty applies to the taxable portion of the conversion, even though you already paid income tax when you converted.5Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements (IRAs) Any additional taxable amount flows through to your state return as well.
Inherited Roth IRAs
Inherited Roth IRAs are usually favorable at the state level for the same reason they’re favorable federally. Withdrawals of the original owner’s contributions are tax-free, and withdrawals of earnings are tax-free as long as the account satisfied the five-year rule before the owner’s death.6Internal Revenue Service. Retirement Topics – Beneficiary Most inherited Roth IRAs have been open well past five years, so the full distribution stays out of both federal and state income.
The SECURE Act requires most non-spouse beneficiaries to empty an inherited Roth IRA within ten years of the owner’s death. That deadline forces the timing of distributions but doesn’t change their tax character.
The exception is a Roth IRA opened less than five years before the owner died. In that case, the earnings portion of beneficiary distributions is federally taxable, and conforming states tax it too. Track the taxable and nontaxable portions on Form 8606.7Internal Revenue Service. About Form 8606, Nondeductible IRAs
Moving Between States
Changing your state of residence doesn’t change whether a qualified Roth distribution is tax-free. It’s excluded from federal income wherever you live, and conforming states follow. Two narrower issues can come up around a move.
Part-Year Returns
If you move mid-year, both states may require a part-year resident return. The general rule is that income received while you were a resident of a state is taxable by that state. For a qualified Roth distribution this is academic, because the taxable amount is zero everywhere. If you take a non-qualified distribution with taxable earnings during a move year, the state where you lived on the day you received the distribution is the one that taxes it.
Keep Your Basis Records
The practical concern in a move is documentation. Retain IRS Form 5498 for every year you contributed to a Roth IRA, since these report annual contributions and prove your basis. Keep your filed copies of Form 8606 from any year you took distributions or made conversions.3Internal Revenue Service. Instructions for Form 8606
If you ever take a non-qualified distribution, your state needs to know how much of the withdrawal represents previously taxed contributions versus earnings. Without that record, you could pay state tax on money that was always tax-free. Roth IRAs have no required minimum distributions during the owner’s lifetime, so hold these records for as long as the account exists.