Updated September 4, 2026. Quick answer: It depends on whether the fund is contributory. Massachusetts fully exempts public and federal pensions paid from a contributory retirement fund, one the employee paid into, and also exempts U.S. military retirement pay whether or not the retiree contributed, but taxes private pensions and IRA/401(k) distributions (with an offset for contributions already taxed once by the state).
Federal civil service pensions in Massachusetts: does Massachusetts tax federal pensions.
More on public pension systems, topic by topic: Massachusetts retirement repaying withdrawn deductions and Massachusetts pension after leaving service.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Massachusetts tax on inherited IRA withdrawals.
Three more Massachusetts retirement boards (Norfolk County, Bristol County and Cambridge), with options and refund rules from their own documents: Norfolk County Retirement System decisions, Bristol County Retirement System decisions and Cambridge Retirement System decisions.
Two Massachusetts county and regional retirement boards, with options and refund rules from their own documents: Middlesex County Retirement System decisions and Worcester Regional Retirement System decisions.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Massachusetts a community property state?.
A pension earned in another state, or paid after a move, is covered here: does Massachusetts tax out-of-state pensions.
The Boston Retirement System payment options and refund rules, from the system’s own pages: Boston Retirement System decisions.
Trusts have their own page: does Massachusetts tax trust income.
Dividends and interest have their own page: does Massachusetts tax dividends and interest.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Massachusetts tax HSA contributions?.
Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Massachusetts have a gift tax?.
Annuity payments have their own page: does Massachusetts tax annuity income.
Military retired pay has its own page: does Massachusetts tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Massachusetts 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Massachusetts tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Massachusetts tax 401(k) and IRA withdrawals.
The Massachusetts state system Option A, B and C and refund rules, from chapter 32 of the General Laws: Massachusetts state retirement decisions.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Massachusetts taxes retirement income generally.
The rule in the source’s own words. Massachusetts General Laws, chapter 62, section 3: “any income from any contributory annuity, pension, endowment or retirement fund of the United States government or the commonwealth” (source, read October 5, 2026). This page’s governing citation: M.G.L. c.62 sec. 2(a)(2)(E) (pension exclusion), sec. 3(B)(a)(4) (contributory-fund deduction), sec. 3(B)(b)(1)(C) ($700 exemption).
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Fully exempt, no age or income threshold, provided the fund is “contributory” (one the employee contributed to). |
|---|---|
| Private (employer) pensions | Taxable, with a deduction only for the portion of distributions attributable to contributions already taxed by Massachusetts in a prior year; no dedicated private-pension exemption exists. |
| Federal government pensions (FERS/CSRS) | Exempt on the same contributory-fund test as public pensions, applied without discrimination by source; Massachusetts issued this rule (TIR 89-6) specifically in response to Davis v. Michigan (1989). |
| Military retirement pay | Exempt. M.G.L. c.62 sec. 2(a)(2)(E), as currently published, exempts retirement pay received from the U.S. government by a retired member of the Uniformed Services whether or not the retiree contributed to the retirement system. Earlier Massachusetts guidance (TIR 92-3, following Barker v. Kansas (1992)) treated military retirement pay as taxable, so older sources may say otherwise. |
| IRA and 401(k)/403(b) distributions | Taxable, with a deduction for the portion of distributions attributable to contributions already subject to Massachusetts income tax in a prior year, since Massachusetts does not conform to federal pre-tax treatment the same way. |
| General retirement-income exclusion | A flat $700 additional personal exemption at age 65+, with no income cap, plus a separate Senior Circuit Breaker credit (statutory base $1,500, income- and home-value-capped, adjusted annually for inflation). |
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Social Security is never taxed by Massachusetts. Social Security has its own rules in every state; see the full breakdown in how Massachusetts taxes retirement income generally.
Figures verified against M.G.L. c.62 secs. 2, 3 and 6 as published on malegislature.gov, and Massachusetts DOR TIR 89-6 and TIR 92-3, on September 30, 2026; the tax year in which the military retirement exemption took effect was not re-checked.
Statute and sources
Governing citation: M.G.L. c.62 sec. 2(a)(2)(E) (pension exclusion), sec. 3(B)(a)(4) (contributory-fund deduction), sec. 3(B)(b)(1)(C) ($700 exemption).
Read September 4, 2026.
Related: how Massachusetts taxes retirement income generally · does Massachusetts tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.