Best States for Retirees: Tax-Friendly Retirement Destinations (2026)

· Updated

Where you retire can save — or cost — you tens of thousands of dollars a year. State taxes, cost of living, healthcare access, and climate all matter. Here’s a data-driven look at the best and worst states for retirement.

Table of Contents

Top 15 Best States for Retirees (Overall)

Rank State Tax Score Cost of Living Healthcare Climate Overall
1 Florida ★★★★★ ★★★☆☆ ★★★★☆ ★★★★★ A+
2 Tennessee ★★★★★ ★★★★☆ ★★★☆☆ ★★★★☆ A
3 Wyoming ★★★★★ ★★★★☆ ★★★☆☆ ★★★☆☆ A
4 Nevada ★★★★★ ★★★☆☆ ★★★☆☆ ★★★★☆ A
5 South Dakota ★★★★★ ★★★★☆ ★★★☆☆ ★★☆☆☆ A-
6 Texas ★★★★★ ★★★★☆ ★★★☆☆ ★★★★☆ A-
7 Delaware ★★★★☆ ★★★☆☆ ★★★★☆ ★★★★☆ A-
8 South Carolina ★★★★☆ ★★★★☆ ★★★☆☆ ★★★★★ A-
9 Georgia ★★★★☆ ★★★★☆ ★★★★☆ ★★★★☆ B+
10 Mississippi ★★★★☆ ★★★★★ ★★☆☆☆ ★★★★☆ B+
11 Arizona ★★★★☆ ★★★☆☆ ★★★★☆ ★★★★★ B+
12 North Carolina ★★★☆☆ ★★★★☆ ★★★★☆ ★★★★☆ B+
13 Alabama ★★★★☆ ★★★★★ ★★☆☆☆ ★★★★☆ B+
14 Pennsylvania ★★★★☆ ★★★☆☆ ★★★★☆ ★★★☆☆ B
15 New Hampshire ★★★★★ ★★☆☆☆ ★★★★☆ ★★☆☆☆ B

States With No Income Tax

These 9 states charge no state income tax on any income:

State Income Tax Sales Tax Property Tax (Effective Rate) Cost Index
Alaska None None 1.04% 128
Florida None 6.0% 0.86% 103
Nevada None 6.85% 0.53% 104
New Hampshire None* None 1.93% 113
South Dakota None 4.5% 1.08% 92
Tennessee None 7.0% 0.56% 90
Texas None 6.25% 1.68% 93
Washington None 6.5% 0.87% 110
Wyoming None 4.0% 0.55% 95

*New Hampshire taxes interest and dividends only (being phased out).

States That Exempt Retirement Income

Beyond no-income-tax states, these states exempt most or all retirement income:

State Social Security Pension 401(k)/IRA Military
Illinois Exempt Exempt Exempt Exempt
Iowa Exempt Exempt Exempt Exempt
Mississippi Exempt Exempt Exempt Exempt
Pennsylvania Exempt Exempt Exempt Exempt
Alabama Exempt Exempt (state/local) Taxed Exempt
Hawaii Exempt Exempt (state) Taxed Taxed
Michigan Exempt Partially exempt Partially exempt Exempt

Tax Comparison: Retiree With $60,000 Income

Assuming $24,000 Social Security + $20,000 pension + $16,000 IRA withdrawal:

State State Income Tax Sales Tax (est.) Property Tax ($250K home) Total State Tax
Florida $0 $1,800 $2,150 $3,950
Tennessee $0 $2,100 $1,400 $3,500
Texas $0 $1,875 $4,200 $6,075
Wyoming $0 $1,200 $1,375 $2,575
Nevada $0 $2,055 $1,325 $3,380
Illinois $0 $1,563 $4,750 $6,313
Pennsylvania $0 $1,200 $3,500 $4,700
Mississippi $0 $2,100 $1,700 $3,800
Georgia $1,600 $1,350 $2,200 $5,150
Arizona $650 $1,575 $1,575 $3,800
North Carolina $1,900 $1,350 $2,100 $5,350
California $1,250 $2,288 $2,000 $5,538
New York $2,500 $1,200 $4,250 $7,950
Connecticut $2,000 $952 $4,500 $7,452
Minnesota $2,200 $1,350 $2,750 $6,300

Wyoming, Nevada, and Tennessee offer the lowest total state tax burden for retirees.

Cost of Living for Retirees by State

Monthly budget for a retired couple:

State Housing Healthcare Food Transport Utilities Monthly Total
Mississippi $900 $650 $500 $400 $350 $2,800
Oklahoma $950 $680 $510 $420 $370 $2,930
Arkansas $920 $660 $520 $410 $380 $2,890
Alabama $950 $670 $510 $430 $390 $2,950
Tennessee $1,050 $680 $510 $420 $360 $3,020
Georgia $1,100 $690 $520 $430 $380 $3,120
South Carolina $1,100 $690 $530 $420 $380 $3,120
Arizona $1,200 $700 $530 $440 $340 $3,210
Florida $1,350 $710 $540 $450 $400 $3,450
Texas $1,150 $720 $520 $460 $400 $3,250
North Carolina $1,150 $690 $520 $420 $370 $3,150
National Average $1,400 $750 $550 $450 $400 $3,550
Colorado $1,500 $720 $560 $440 $350 $3,570
Virginia $1,450 $740 $550 $460 $380 $3,580
Washington $1,650 $710 $580 $430 $340 $3,710
New York $2,000 $780 $620 $500 $420 $4,320
California $2,200 $760 $640 $480 $380 $4,460
Hawaii $2,500 $720 $700 $450 $450 $4,820

A retired couple can live on $33,600/year in Mississippi versus $57,840/year in Hawaii — a 72% difference.

Healthcare Access for Retirees

State Doctors per 100K Medicare Advantage Penetration Avg Medigap Premium (Plan G) Healthcare Ranking
Massachusetts 450 28% $165/month #1
Hawaii 370 42% $145/month #2
Minnesota 340 55% $135/month #3
Vermont 385 18% $160/month #4
Colorado 330 40% $140/month #5
Florida 280 52% $125/month #15
Tennessee 270 48% $120/month #25
Georgia 250 45% $130/month #30
Texas 225 44% $135/month #35
Mississippi 185 32% $115/month #50

Some of the most tax-friendly states rank lower in healthcare quality. Florida strikes a reasonable balance.

Climate Comparison

State Avg Winter Low (°F) Avg Summer High (°F) Sunny Days/Year Natural Disaster Risk
Florida 50-60 90-92 237 High (hurricanes)
Arizona 35-45 104-107 299 Low
South Carolina 35-42 90-93 215 Moderate (hurricanes)
Tennessee 28-35 88-92 204 Moderate (tornadoes)
Nevada 28-35 100-106 294 Low
Texas 35-45 94-100 234 Moderate (hurricanes, tornadoes)
North Carolina 30-38 86-90 213 Moderate (hurricanes)
Georgia 33-40 90-93 217 Low-Moderate
Wyoming 10-18 82-88 206 Low
South Dakota 5-12 85-90 200 Moderate (blizzards)

Best States by Retirement Priority

Lowest Taxes

  1. Wyoming
  2. Nevada
  3. Tennessee
  4. Florida
  5. South Dakota

Lowest Cost of Living

  1. Mississippi
  2. Arkansas
  3. Oklahoma
  4. Alabama
  5. West Virginia

Best Healthcare

  1. Massachusetts
  2. Hawaii
  3. Minnesota
  4. Vermont
  5. Colorado

Best Climate (Warm Weather)

  1. Florida
  2. Arizona
  3. South Carolina
  4. Hawaii
  5. California

Best Overall Balance

  1. Florida — No income tax, warm climate, good healthcare, moderate cost of living
  2. Tennessee — No income tax, very affordable, four seasons, growing economy
  3. South Carolina — Favorable taxes, low cost of living, beach access, mild winters
  4. Georgia — Affordable, major airports (Atlanta), good healthcare, mild climate
  5. Arizona — Low taxes, sunshine, active retirement communities, dry climate

Worst States for Retirees (by Taxes)

Rank State Why It’s Expensive
1 New York High income tax + property tax + cost of living
2 California High income tax on all retirement income + extreme cost of living
3 Connecticut Taxes Social Security + high property tax + high cost of living
4 Minnesota Taxes Social Security + cold winters + moderate cost of living
5 Vermont Taxes Social Security + high property tax + cold climate

How Much You Can Save by Relocating

Moving from a high-tax state to a retirement-friendly state:

Move Annual Tax Savings 20-Year Savings (invested at 5%)
New York → Florida $4,000-8,000 $132,000-264,000
California → Tennessee $3,500-7,000 $116,000-231,000
Connecticut → South Carolina $3,000-6,000 $99,000-198,000
Minnesota → Arizona $2,500-5,000 $83,000-165,000
New Jersey → Delaware $2,000-4,000 $66,000-132,000

A couple saving $6,000/year in taxes over a 20-year retirement, invested at 5%, accumulates $198,000+.

Key Takeaways

  1. No-income-tax states (FL, TN, TX, NV, WY, SD, AK, NH, WA) save retirees thousands in annual taxes
  2. Total tax burden includes income, sales, and property tax — no-income-tax states may make up revenue elsewhere (Texas: high property tax)
  3. Wyoming, Nevada, and Tennessee have the lowest total state tax burden for retirees
  4. Mississippi and Arkansas are the most affordable states to retire in overall
  5. Florida offers the best balance of no income tax, warm climate, and reasonable healthcare
  6. Relocating can save $66,000-264,000 over a 20-year retirement when tax savings are invested
  7. Healthcare quality varies widely — some of the most affordable states rank lowest for healthcare access