from https://www.irs.gov/pub/irs-pdf/p901.pdf page 51
I am not a tax expert, but this to me reads that UK state pensions are not exempt from US tax if you are a US citizen.
United Kingdom
Pensions paid by, or funds created by, the United Kingdom or its political subdivisions or local authorities for
services performed for the United Kingdom are exempt from U.S. income tax unless the recipient is both a resident and a citizen of the United States. These exemptions do not apply to income or pensions for services performed in connection with a business carried on by the United Kingdom or its political subdivisions or local authorities.
Here's ChatGPT's simplification of Article 17 of the US /UK tax treaty
Pensions, Social Security, Annuities, Alimony, and Child Support
- a) Pensions received by a resident of one country are only taxed in that country.
b) However, if a pension from the other country would be tax-free if the recipient lived there, it will also be tax-free in the recipient’s country. - Lump-sum pension payments from one country to a resident of the other country are only taxed in the country where the pension was established.
- Social security payments from one country to a resident of the other country are only taxed in the recipient’s country.
- Annuities received by a resident of one country are only taxed in that country. An annuity refers to regular payments made over a period of time in exchange for full payment upfront (not for services).
- Alimony and child support payments between residents of different countries are tax-free in both countries. However, if the payer receives a tax benefit in their country, the payments will only be taxed in the recipient’s country.
