State-by-State Guide: How Pension & DROP Income Is Taxed A reference guide for firefighters and public safety retirees. Verify exact figures with your state's Department of Revenue before filing, as thresholds and rules change frequently. Tier 1: No State Income Tax At All These 9 states don't tax any income — including pensions, DROP payouts, 401(k)/457(b) distributions, and Social Security. State Notes Alaska No income tax. High property tax in some areas. Florida No income

The drop is essentially what lets someone keep working even though they are eligible to retire while their pension payments added up in a separate account instead of being paid out. The DROP ( Deferred Retirement Option Plan) is a pension system thats offered that lets an employee that is already eligble to retire keep working while their pension payments accumulate separately instead of being paid out. So in other words once you reach retirement eligibility for your departme

Pensions are something you should understand whether you are applying to a firefighter job or you are twenty years on the job. The former, you should be informed about how much money you have earned each month for the rest of your life. The latter, so you can be involved and informed during negotiations so you can be knowledgeable when it comes time to make a decision. What is a Pension? Pensions are a retirement plan that will give you consistent regular payments after you h