Choosing where to retire is one of the biggest financial decisions you’ll make. Some states tax retirement income heavily and others, such as Florida and Tennessee, levy no state personal income tax, so the same retirement income can leave very different amounts after state taxes. Housing, insurance, healthcare access and climate matter just as much. This guide sets out what each state’s own revenue site says about taxing retirement income, what federal price data says about cost of living, and how to weigh the parts that no official source can score for you.
How to Read This Guide
Everything in the tax and cost sections below comes from a state revenue agency, a state government site, federal law or the Bureau of Economic Analysis. The shortlists of states by priority are editorial opinion, not scores. They are starting points for your own research, not rankings produced by data. Tax rules change often and several of the exemptions below depend on age, plan type or income, so confirm the current rule with the state before you act.
Editorial Shortlists by Priority
These lists are our judgment about where to begin looking, not a ranking, and no numeric score sits behind them.
| If your priority is | States worth a look first | Why (opinion) |
|---|---|---|
| Keeping state income tax low on large withdrawals | Florida, Tennessee, Texas, Wyoming, Nevada, South Dakota | No state personal income tax (see the next section for sources) |
| Income that is mostly Social Security and a pension | Illinois, Mississippi, Pennsylvania | Income tax exists, but each excludes qualifying retirement income |
| A lower general price level | Arkansas, Mississippi, Iowa, Oklahoma | Lowest price parities in the 2024 BEA data |
| Access to major medical centres | Check the hospitals and specialists near each place you consider | Healthcare quality varies by county more than by state |
| Warm winters or four seasons | Visit in January and July before deciding | Climate is personal, and no official source scores it |
States With No Personal Income Tax
Each statement below is from the state’s own site. No income tax does not mean no taxes: sales, property and insurance costs differ a lot, and the table of state sales tax rates after this one shows part of that picture. See state income tax rates for a full comparison.
| State | What the state says |
|---|---|
| Florida | “Florida does not impose a personal income tax, so there are no filing requirements.” |
| Nevada | “The State of Nevada does not impose a state income tax on individuals” |
| South Dakota | “South Dakota is one of seven states that does not impose a state income tax” |
| Tennessee | “Tennessee has no state income tax on earned income”; the Hall income tax on investment income “was repealed for tax periods that begin on January 1, 2021” |
| Texas | “Texas has no state income tax.” |
| Wyoming | “Wyoming does not possess an individual or corporate income tax” |
Alaska, New Hampshire and Washington are not in this table because we could not confirm their current rules from the state’s own page. Washington, for one, taxes capital gains: its Department of Revenue says “Your first $1 million in taxable Washington capital gains is subject to tax at a rate of 7%.” Check each state’s revenue site before counting on a rule.
State Sales Tax Rates in These States
| State | Statewide sales tax rate |
|---|---|
| Florida | 6% |
| Nevada | 6.85% |
| South Dakota | 4.2% |
| Tennessee | 7% |
| Texas | 6.25% |
| Washington | 6.5% |
Texas says the state rate is 6.25 percent “but local taxing jurisdictions” may add to it, and South Dakota says its municipalities may impose their own tax, so the rate you pay can be higher than the statewide figure.
Sales tax in Wyoming is not in this table because the only source we found was a 2021 legislative report.
States That Tax Little or None of Your Retirement Income
These states have a general income tax but carve out retirement income. The details matter, so read the condition for each.
| State | What the state’s own site says | Condition to note |
|---|---|---|
| Illinois | Income tax rate is “4.95 percent of net income”; the state does not tax federally taxed amounts received from qualified employee benefit plans, including 401(k) plans, and from IRAs | Exclusion applies to the listed retirement sources |
| Mississippi | “Mississippi does not tax benefits received from U.S. Social Security”; retirement income, pensions and annuities are generally not subject to tax | Only “if the recipient has met the retirement plan requirements”; early distributions may be taxed |
| Pennsylvania | Personal income tax is levied at 3.07 percent; Social Security payments and retirement distributions after retirement age are not taxable compensation | IRA distributions are treated as exempt “so long as the taxpayer is not required to pay a penalty for early withdrawal” |
| Iowa | Retirement income is excluded from Iowa taxable income “for tax years beginning on or after January 1, 2023” | Taxpayer must be 55 or older on December 31 of the tax year, or disabled, or a qualifying surviving spouse or survivor |
| Georgia | Taxpayers 62 or older, or permanently and totally disabled, “may be eligible for a retirement income adjustment” | An adjustment, not a full exemption; eligibility rules apply |
| Alabama | Top rate is 5% on taxable income over $3,000 (single, head of family and married filing separately) | Amounts received under the Federal Social Security Acts are excluded; check how Alabama treats IRA and private pension income before assuming an exemption |
The Social Security tax guide covers federal taxation of benefits separately.
States That Tax More of Your Retirement Income
These states have higher top rates and, in some cases, only partial relief for retirement income. The last column shows how each treats Social Security and pensions.
| State | Rate information from the state | Retirement-income notes |
|---|---|---|
| California | 2025 rate schedule: “12.30%” on the top bracket, plus a 1% Behavioral Health Services Tax on taxable income above $1,000,000 | California excludes U.S. Social Security benefits from taxable income |
| New York | 10.90 percent on income over $25 million (all filers) | Social Security included in federal AGI may be subtracted; the pension and annuity exclusion cannot exceed $20,000 |
| New Jersey | Rate on the top bracket rises from 8.97% to 10.75% | Social Security and Railroad Retirement benefits are not taxable |
| Oregon | Tax of $10,627 plus 9.9% of excess over $125,000 (part-year and nonresident chart) | Oregon does not tax Social Security benefits |
| Minnesota | 2025 top bracket 9.85% | Taxpayers with AGI below $108,320 (joint) or $84,490 (single or head of household) can subtract all Social Security benefits included in AGI |
Top rates apply only to income above the top bracket threshold, so a typical retirement income is taxed at lower rates. We have not estimated a dollar tax bill for any income level because the result depends on filing status, deductions and income mix. Use the state’s own calculator or tax tables.
Cost of Living: What the Federal Price Data Says
The Bureau of Economic Analysis publishes regional price parities (RPPs), which it says are “expressed as a percentage of the overall national price level.” The 2024 release says “States with the lowest RPPs were Arkansas, at 86.9, Mississippi, at 87.0, Iowa, at 87.8 and Oklahoma, at 87.8.” At the other end, “States with the highest RPPs in 2024 were California, at 110.7, Hawaii, at 110.0 and New Jersey, at 108.8.” The full state-by-state table is only available in BEA’s interactive tool, so we show only the extremes.
| State | 2024 RPP (percent of national price level) | Position |
|---|---|---|
| Arkansas | 86.9 | Lowest |
| Mississippi | 87.0 | Second lowest |
| Iowa | 87.8 | Tied third lowest |
| Oklahoma | 87.8 | Tied third lowest |
| New Jersey | 108.8 | Third highest |
| Hawaii | 110.0 | Second highest |
| California | 110.7 | Highest |
California also had the highest RPP for housing rents, at 154.3, and West Virginia the lowest, at 54.2. An RPP measures price levels for a typical consumer, not a retiree’s budget. See managing money in retirement for ways to stretch fixed income in any state.
Healthcare Access
Healthcare access is the factor most underweighted by retirees who focus only on taxes, but we do not publish a state-by-state healthcare score because we could not tie one to an official source. What we can say from Medicare.gov is that “Medigap premiums vary widely depending on the insurance company, the plan, and where you live,” so price your own plan for each state you consider. As a matter of opinion, healthcare quality varies more between counties than between states, so look at the hospitals, specialists and Medicare Advantage plans available near the specific place you are considering, especially if you plan to live rurally or have a chronic condition.
Best States by Retiree Type (Editorial)
These are opinion-based starting points, not data-driven rankings.
Budget-conscious retirees
Low price levels and tax treatment of retirement income both matter. Arkansas, Mississippi, Iowa and Oklahoma had the lowest 2024 RPPs. Mississippi and Iowa also exclude qualifying retirement income from state tax (with the conditions above), and Tennessee levies no personal income tax. Mississippi is not the cheapest state in the BEA data: Arkansas, at 86.9, is below Mississippi, at 87.0.
Higher-income retirees with large withdrawals
If most of your income is IRA or pension withdrawals, states with no personal income tax (Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming) remove state income tax from the equation, while property tax, insurance and sales tax still apply. Federal law (4 U.S.C. 114) says “No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State,” so what matters is the state where you are legally resident. Each state has its own residency tests, so read your old state’s rules and your new state’s rules before relying on a move for tax reasons.
Healthcare-priority retirees
If you manage a serious condition, choose a location by the specific hospitals and specialists you would use and by the Medicare plans sold there, and weigh that above tax savings. Large cities and academic medical centres tend to offer more specialists, but that is a general observation and not a figure we can source.
Active and outdoor retirees
Choose by what you will actually do. Colorado, Arizona, North Carolina, Utah and South Carolina are common picks for outdoor retirement in our opinion, but climate is subjective and we do not publish sunny-day or temperature figures. Spend a few weeks in each place in different seasons.
Snowbirds
A split-year retiree should treat the choice of tax home as a legal question, not a preference. States define residency differently and some audit former residents, so get the rules from the revenue department of both states, and consider a tax professional’s advice before you move.
Costs the Tables Don’t Capture
Insurance, property tax and housing costs can offset income-tax savings. Homeowners insurance and property tax vary by county and property, and we have not found an official statewide figure we can quote for them, so get quotes for specific addresses before you compare states. Selling a home in a high-cost area and buying in a lower-cost one can free up equity, but the amount depends entirely on the two prices and transaction costs.
For a side-by-side tax comparison, see best states to retire for taxes and state taxes on retirement income. Return to the Best Places to Retire hub.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy