State income taxes on retirement income can cost retirees $5,000-$15,000+ per year. On a $100,000 retirement income, the difference between California (up to 13.3% state tax) and Florida (0%) is over $13,000 annually — every single year of retirement. Choosing the right state is one of the highest-impact financial decisions you can make.
These states impose zero state income tax on any income — Social Security, pensions, IRA withdrawals, investment income, and wages are all untaxed at the state level:
| State | COL Index | Property Tax Rate | Retirement Verdict |
|---|---|---|---|
| Tennessee | 91 | 0.56% | ⭐⭐⭐⭐⭐ Excellent |
| Florida | 99 | 0.83% | ⭐⭐⭐⭐⭐ Excellent |
| Texas | 95 | 1.60% | ⭐⭐⭐⭐ Very Good |
| Wyoming | 96 | 0.55% | ⭐⭐⭐⭐⭐ Excellent |
| South Dakota | 93 | 1.08% | ⭐⭐⭐⭐ Very Good |
| Nevada | 100 | 0.55% | ⭐⭐⭐⭐ Very Good |
| New Hampshire | 104 | 1.86% | ⭐⭐⭐ Good (high property tax) |
| Washington | 114 | 0.84% | ⭐⭐⭐ Good (high COL) |
| Alaska | 109 | 1.04% | ⭐⭐⭐ Good (remote) |
Best overall for retirees: Tennessee and Wyoming offer zero income tax, low property taxes, and below-average cost of living — the trifecta for retirement affordability.
Tennessee is arguably the best overall state for retirement taxes. No state income tax, property taxes among the lowest in the nation (0.56%), and a cost of living 9% below the national average. Nashville offers world-class healthcare and culture. The Smoky Mountains provide natural beauty. The only downside: summers are hot and humid.
Wyoming combines no income tax with very low property taxes and a low cost of living. The population is small, healthcare options outside of Cheyenne and Casper are limited, and winters are harsh. But for retirees who value wide open spaces, outdoor recreation, and minimal taxes, Wyoming delivers.
Florida remains the most popular retirement destination in the US. No income tax, warm weather year-round, large retiree communities, and strong Medicare Advantage markets. The trade-offs are rising insurance costs (homeowner and flood insurance in hurricane zones) and a cost of living that has risen significantly in recent years. South Florida is now expensive; central and northern Florida remain more affordable.
Texas has no income tax and a low cost of living in most areas, but property taxes are notably high (1.60% average) — one of the highest in the nation. For a $300,000 home that's $4,800/year. Dallas, San Antonio, and Fort Worth offer excellent healthcare and amenities. Texas ranks #3 overall in Motley Fool's 2026 retirement rankings.
Even if a state has income tax, many exempt Social Security benefits entirely. This can be nearly as valuable as no-income-tax status for retirees whose primary income is Social Security:
| State | SS Taxed? | Other Retirement Income | COL Index |
|---|---|---|---|
| Pennsylvania | Not taxed | Pensions/401k often exempt | 97 |
| Mississippi | Not taxed | Retirement income exempt | 85 |
| Illinois | Not taxed | Retirement income exempt | 100 |
| Iowa | Not taxed | Retirement income exempt (2023+) | 91 |
| Kentucky | Not taxed | $31,110 pension exclusion | 92 |
| Georgia | Not taxed | $65,000 retirement exclusion (65+) | 94 |
| South Carolina | Not taxed | $15,000 retirement deduction | 96 |
| Delaware | Not taxed | $12,500 pension exclusion | 102 |
These states have the highest combined tax burden on retirees:
On a $100,000 retirement income (Social Security + IRA withdrawals):
| State | Est. State Tax | After-Tax Income | Annual Savings vs CA |
|---|---|---|---|
| California | ~$12,500 | $87,500 | — |
| New York | ~$8,000 | $92,000 | $4,500 |
| Minnesota | ~$7,500 | $92,500 | $5,000 |
| Florida/TN/TX | $0 | $100,000 | $12,500 |
| Wyoming | $0 | $100,000 | $12,500 |
Over a 20-year retirement, $12,500/year in tax savings equals $250,000 in additional retirement spending — a meaningful amount that directly extends how long your savings last.
See how state taxes and cost of living affect your retirement runway with our retirement calculator.
Use the Retirement Calculator →State income taxes can cost retirees $5,000-$15,000 per year. The nine states with no income tax — led by Tennessee, Wyoming, and Florida — offer the most tax-friendly retirement environments. Even states with income tax often exempt Social Security and offer retirement income deductions. Run the tax math alongside cost of living before choosing your retirement state — the combination of both factors determines your real retirement purchasing power.
For informational and educational purposes only. Tax laws change. Consult a tax professional before making retirement relocation decisions.