Best states to retire for taxes
Discover which U.S. states offer the most tax-friendly environments for retirees, from zero income taxes to low property and sales taxes.
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Key Takeaways
Some states offer significant tax advantages on retirement income, property, and everyday purchases, making them ideal for retirees looking to lower their tax burden.
Before relocating, consider factors like capital gains tax, healthcare costs, and proximity to family to ensure a comfortable retirement lifestyle.
States like Florida, Wyoming, and Nevada consistently rank as top choices for their lack of income taxes and low property tax rates.
What to consider when choosing what state to retire in
Some states might offer a more attractive retirement lifestyle due to tax and other financial benefits, leading to many retirees relocating during retirement. States with lower income, property, and sales tax rates can help retirees stretch their retirement savings and maintain their quality of life when they are no longer working.
However, before packing your bags, it is also important to take other factors into consideration for your retirement. You should also take note of other tax rates, such as capital gains, estate, and inheritance taxes, as well as quality of life, to weigh out the pros and cons when choosing the best place for you to retire.
Before looking at the states with the best retirement taxes, here are some other important factors to consider.
Property taxes
While homeownership may be a decent way to lock in housing costs for the long run, states with high property taxes may discourage retirees from owning or purchasing a home. Property taxes and other rules can vary drastically between states; therefore, if you are looking into buying property in another state, you should understand the differences between states.
Some states may also offer exemptions, or circuit breakers, to help limit the tax burden for retirees. Also called homestead exemptions, they may have income limits you’ll need to meet to qualify.
Property tax deferrals are something else to keep in mind when looking into the most tax-friendly states for retirees. These deferrals allow retirees and seniors to postpone some or all of their property taxes. If the property is eventually sold, the deferred property tax payments would come out of the revenue, so you might not even pay it directly.
While states like Hawaii, Alabama, Arizona, and South Carolina offer some of the lowest property taxes by state, property taxes may also vary between counties.1 Therefore, you should also check county rates before deciding where to buy property.
Sales taxes
While sales tax may not seem like a lot up front, it can still add up over time and affect your cost of living. Lower sales taxes can help keep your day-to-day expenses down — which can be especially beneficial when inflation is high.
States like Oregon, Montana, Alaska, and New Hampshire forego statewide sales taxes.2 However, some states, like Alaska, can still impose local sales taxes. Therefore, you should also consider local tax laws when looking into tax-friendly states for retirees.
Retirement income tax
Aside from property and sales taxes, some states, like Florida, Nevada, and Wyoming, do not impose income taxes at all. Some of the most tax-friendly states for retirees are those with low to no income taxes, as they can benefit from receiving income from Social Security, pensions, or traditional retirement account distributions without state income taxes.
State tax regulations on retirement accounts and pension income can largely impact a retiree’s finances. Living in a state that has tax exemptions for retirement income can help stretch retirement funds further.
Capital gains taxes
When selling capital assets, like shares in a company or real estate property, the net earnings — or capital gains — on these sales are generally subject to taxes. This is generally true for most states.
However, eight states — Arizona, Arkansas, Hawaii, Montana, New Mexico, North Dakota, South Carolina, and Wisconsin — tax capital gains at lower rates than ordinary income.3 When looking into the best states to retire for tax purposes, it is important to consider capital gains taxes if you expect to have high net earnings during retirement.
Quality of life
If you are looking for the most tax friendly states for retirees, it may be wise to consider other aspects that can affect your quality of life.
Cost of living — including housing, taxes, healthcare, insurance, and the cost of daily goods and services — can also greatly impact your finances during retirement. Aside from taxes, you should also ensure you will be able to live comfortably in terms of affording groceries, transportation costs, and recreational activities.
You may also want to check healthcare costs in your state, or the state you are interested in, to ensure they are affordable. Some states may have higher out-of-pocket healthcare costs, depending on which Medicare plan you have.
When considering a move during retirement, it is essential to take the local climate into account — beyond just the financial perks. While Alaska's favorable tax benefits may be attractive on paper, it may not align with your lifestyle if you thrive in beachside settings or prefer a consistently warm, sunny climate. The best state to retire for taxes can be different for everyone, depending on personal desires.
Furthermore, you might also want to consider the proximity to your family. While relocating may offer financial or lifestyle advantages, increasing the distance from your family and other loved ones means travel may likely become a recurring expense. Therefore, you might also consider if your financial situation allows you to budget for recurring travel costs.
Best tax-friendly states for retirees in 2025
The best states to retire tax-wise are those with low or no taxes on retirement income, low property taxes, and no state income tax. Here are some of the most tax-friendly states for retirees as of 2025:
1. Florida
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.74%; homestead exemption helps reduce rate
Sales tax: 6% state tax rate (local rates may apply)
2. Wyoming
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.55%
Sales tax: 4% state tax rate
3. South Dakota
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.99%
Sales tax: 4.2% state tax rate (plus local taxes)
4. Nevada
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.49%
Sales tax: 6.85% state tax rate (local tax rates may apply)
5. Alaska
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.91%; can vary by borough
Sales tax: None (local jurisdictions may impose small rates)
6. Tennessee
Retirement income tax: None
Capital gains tax: None
Property taxes: 0.49%
Sales tax: 7% state tax rate (one of the highest combined with local tax rates)
7. New Hampshire
Retirement income tax: No tax on earned or retirement income
Capital gains tax: None
Property taxes: 1.41%
Sales tax: None
8. Delaware
Retirement income tax: Social Security is not taxed; other retirement income is partially excluded
Capital gains tax: Yes (taxed as regular income)
Property taxes: 0.5%
Sales tax: None
9. Mississippi
Retirement income tax: None on retirement income
Capital gains tax: Yes
Property taxes: 0.58%
Sales tax: 7%
10. Georgia
Retirement income tax: Excludes up to $65,000 per person age 65+
Capital gains tax: Yes
Property taxes: 0.77%
Sales tax: 4% state rate (local rates can apply)
Bottom line
Like any other financial decision, the best place to retire ultimately depends on your individual circumstances, priorities, and long-term goals. Whether you are looking for the best state to retire for low taxes or better weather and cost of living, you want to ensure your retirement funds won’t become depleted after a big move.
You can also supplement your retirement savings with a high-yield savings account or certificate of deposit (CD) to help you reserve extra funds and comfortably manage expenses that may arise during your move. The Raisin marketplace gives you access to various high-yield savings products with competitive interest rates — all in one place! Open an account today and start maximizing your saving potential.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
- https://taxfoundation.org/data/all/state/property-taxes-by-state-county/
- https://taxfoundation.org/data/all/state/sales-tax-rates/
- https://taxfoundation.org/data/all/state/state-capital-gains-tax-rates-2024/
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