In retirement, every dollar matters. On a fixed income, a state that taxes your Social Security, pension, and 401(k) can quietly take back a chunk of what you saved. This guide covers the most and least tax-friendly states for retirees, and the tradeoffs to weigh before you move.

A note on the figures below. State tax law changes frequently, and rates, thresholds, and exemptions are moving targets. Several states have repealed their tax on Social Security benefits in the last few years, and estate-tax exemptions shift almost annually. Use the figures here as a starting point and confirm the current rules with your state's department of revenue before making a relocation or estate-planning decision.

The 10 most tax-friendly states for retirees

Start with the states below. Most have no or low income tax and no estate tax, so your beneficiaries aren't left with a heavy bill. Weigh the tax picture against everything else, though: a no-income-tax state that gets cold and snowy may not be worth it if you want sun.

Wyoming

State income tax: none. Average state and local sales tax: about 4% (some counties add up to 2% more). Median property tax rate: 0.55%, among the lowest in the country. Estate or inheritance tax: none.

Wyoming is a tax haven for retirees. There's no income tax at all, so your 401(k), Social Security, pension, and other retirement income go untaxed, and property taxes are very low. It also has Grand Teton and Yellowstone within its borders.

Alaska

State income tax: none. Average state and local sales tax: no statewide tax; cities can impose their own, averaging about 1.76%. Anchorage has none. Median property tax rate: 1.17%, slightly above the national average. Estate or inheritance tax: neither.

If you can handle the cold and short winter days, Alaska has no income or estate tax, and its Permanent Fund Dividend pays residents an average of around $1,600 a year to live there.

Alabama

State income tax: 2% to 5%. Average state and local sales tax: 4% state (one of the lowest), but local taxes push the average to about 9.24%, fifth-highest in the country. Median property tax rate: 0.39%. Estate or inheritance tax: neither.

Alabama doesn't tax pensions or Social Security. It does tax 401(k) and IRA distributions as regular income, though since 2023 the first $6,000 of retirement income for anyone 65 or older is exempt. (A 2025 bill proposed raising that exclusion to $12,000 starting in 2026; confirm whether it took effect.)

Florida

State income tax: none. Average state and local sales tax: 6% state, plus a local option of up to 1.5%. Median property tax rate: 0.80%, below the national average. Estate or inheritance tax: neither.

Florida is one of the most popular places to retire, with warm weather, no income or estate tax, and below-average property taxes. To claim residency and its tax benefits with a second home elsewhere, you generally need to spend more than half the year (183 days) in Florida, with documentation.

Georgia

State income tax: Social Security is not taxed; other retirement income is taxed at a flat rate of 4.99% for 2026 (Georgia moved to a flat tax in 2024 and has been lowering it since). Average state and local sales tax: 4% state, up to 5% local, averaging about 7.37%. Median property tax rate: 0.81%. Estate or inheritance tax: neither.

Georgia taxes non-Social Security retirement income, but anyone 65 or older can exclude up to $65,000 of it (per person). If your 401(k) and pension income is under that, you owe no state tax on it. Cost of living and housing run below the national average.

Delaware

State income tax: 2.2% to 6.6%, with up to $12,500 of pension and other retirement income excludable. Average state and local sales tax: none. Median property tax rate: 0.56%. Estate or inheritance tax: neither.

Delaware does not tax Social Security, and it repealed its estate tax in 2018, so only the federal estate tax applies (the 2026 federal exemption is $15 million per person). One caveat: capital gains are taxed as regular income (2.2% to 6.6%), so if you'll have real estate or other investment sales, talk it through with a financial advisor.

Mississippi

State income tax: 4% to 5%; retirement income for those over 59 1/2 is not taxed. Average state and local sales tax: 7% state, up to 1% local, averaging about 7.07%. Median property tax rate: 0.75%. Estate or inheritance tax: neither.

Mississippi has the lowest cost of living in the country and very low housing costs, and it doesn't tax retirement income once you're past 59 1/2. It's sparsely populated, which suits some retirees and not others.

Nevada

State income tax: none. Average state and local sales tax: 4.6% state, 0% to 3.35% local, averaging about 8.37%. Median property tax rate: 0.74%. Estate or inheritance tax: neither.

Nevada has no income tax and more than 200 sunny days a year. Housing is relatively available and often affordable, with Las Vegas, Reno, and several national parks in reach, though the overall cost of living runs about 10% above the national average.

South Dakota

State income tax: none. Average state and local sales tax: 4.5% state, up to 4.5% local, averaging about 6.4%. Median property tax rate: 1.18%. Estate or inheritance tax: neither.

South Dakota pairs no income tax with one of the lower sales taxes on this list, plus a low cost of living, low healthcare costs, and plenty of outdoor recreation.

Pennsylvania

State income tax: flat 3.07%, but Social Security, pensions, and 401(k)/IRA payments are not taxed if you retire at normal retirement age. Average state and local sales tax: 6% state, up to 2% local, averaging about 6.34%. Median property tax rate: 1.49%, above the national average. Estate or inheritance tax: inheritance tax of 4.5% to 15% depending on the heir's relationship to the deceased.

Pennsylvania's flat 3.07% rate is low, and it doesn't tax most retirement income. Property taxes are above average, but the overall tax picture beats neighboring New York and New Jersey while keeping you close to them.

Inflation? Recession? No worries.

Download our new guide to help safeguard your retirement.

Download Now

The 10 least tax-friendly states for retirees

These states tax more forms of retirement income, sometimes including Social Security, and several also carry high income, sales, or property taxes.

Nebraska

State income tax: 2.46% to 5.84%. Average state and local sales tax: about 6.94% (5.5% state, up to 2.5% local). Median property tax rate: 1.51%. Estate or inheritance tax: no estate tax, but counties levy an inheritance tax.

Nebraska taxes most forms of retirement income, though it fully exempted Social Security benefits starting with the 2024 tax year. Senior homeowners with household income below roughly $43,800 (single) or $52,000 (married) may qualify for a homestead property-tax exemption.

Minnesota

State income tax: 5.35% to 9.85%. Average state and local sales tax: about 7.5% combined. Median property tax rate: 1.02%. Estate or inheritance tax: estate tax on estates over $3 million, at 13% to 16%.

Minnesota taxes most retirement income, including Social Security, though it offers an income-based subtraction for Social Security benefits. The subtraction thresholds have been expanded in recent years, so check the current figures. Winters are long and rates are high.

Illinois

State income tax: flat 4.95%. Average state and local sales tax: about 8.73%. Median property tax rate: 2.07%, second-highest in the country. Estate or inheritance tax: estate tax on estates over $4 million, up to 16%.

Illinois's flat 4.95% rate is manageable, and it exempts Social Security and most retirement-plan income. But property taxes are among the highest in the nation (roughly $10,000 a year on a $500,000 home), and sales taxes run high, with some municipalities near 11% combined.

Connecticut

State income tax: 2% to 6.99%. Average state and local sales tax: 6.35%, no local add-ons. Median property tax rate: 1.96%, among the highest in the country. Estate or inheritance tax: estate tax on estates at or above the federal exemption ($15 million for 2026), at a flat 12%.

Connecticut exempts pension and annuity income only for taxpayers with federal AGI under $75,000 (single) or $100,000 (married). Its separate phase-in of a 100% subtraction for IRA distributions reaches full effect in 2026. Property taxes are among the highest in the country.

New York

State income tax: 4% to 10.9%; New York City adds a local income tax of about 3.08% to 3.88%. Average state and local sales tax: about 8.52%. Median property tax rate: 1.62%. Estate or inheritance tax: estate tax from about 3.06% to 16%.

New York exempts Social Security, government pensions, and military retirement pay, but taxes private pension, IRA, and 401(k) income above $20,000. For 2026, the state estate tax basic exclusion is about $7,350,000, and New York's "cliff" rule means an estate worth more than 105% of the exclusion loses the exclusion entirely and is taxed on the full value.

Kansas

State income tax: 3.1% to 5.7%. Average state and local sales tax: about 8.49% (some areas exceed 11%). Median property tax rate: 1.33%. Estate or inheritance tax: none.

Kansas repealed its tax on Social Security benefits retroactive to January 1, 2024, so benefits are no longer taxed regardless of income. It still taxes 401(k), IRA, and other private retirement income, and its combined sales tax is high; the state grocery sales tax was phased down to 0% by 2025, though local grocery taxes remain.

Wisconsin

State income tax: 3.5% to 7.65%. Average state and local sales tax: about 5.43%, on the low side. Median property tax rate: 1.51%. Estate or inheritance tax: none.

Wisconsin doesn't tax Social Security, but pensions, annuities, and IRA and 401(k) income are taxable. A small subtraction (up to $5,000) is available to those with income under $15,000 ($30,000 filing jointly). Property taxes are high.

New Jersey

State income tax: 1.4% to 10.75%. Average state and local sales tax: about 6.6%. Median property tax rate: 2.26%, the highest in the country. Estate or inheritance tax: no estate tax, but an inheritance tax of 11% to 16% on transfers to more distant heirs (not spouses, children, grandchildren, parents, or grandparents).

New Jersey doesn't tax Social Security and offers a sizable retirement-income exclusion (up to $100,000 for a married couple, $75,000 single) for those 65 or older with total income of $100,000 or less. The tradeoff is the nation's highest property taxes, offset only by a small $15,000 senior deduction.

Vermont

State income tax: 3.35% to 8.75%. Average state and local sales tax: about 6.24%. Median property tax rate: 1.73%. Estate or inheritance tax: estate tax on estates of $5 million or more, at 16%.

Vermont taxes at least part of Social Security benefits for incomes over $50,000 (single) or $65,000 (married). It exempts up to $10,000 of income from federal Civil Service, military, and certain other government retirement systems for joint filers with federal AGI up to $65,000 (up to $50,000 for others).

Ohio

State income tax: 0% to 3.5%. Average state and local sales tax: about 7.22%. Median property tax rate: 1.41%. Estate or inheritance tax: none (Ohio's estate tax was repealed effective 2013).

Ohio doesn't tax Social Security and offers a small retirement-income credit ($25 to $200) for those with qualifying pension, 401(k), or IRA income and total income of $100,000 or less. Property taxes are among the higher in the country.

What to weigh beyond the headline rate

Retirement account and pension income

The federal government taxes 401(k), 403(b), and traditional IRA withdrawals as income. Many states do too, though some offer credits or exclusions for seniors, especially at lower incomes. Check how each state treats every income source you'll actually have.

Property taxes and senior relief

Property tax rates vary widely, and some states or localities offer freezes, exemptions, or credits for residents 65 and older or for veterans. A low income tax can be more than erased by a high property tax bill.

Sales taxes

Five states have no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon). Elsewhere, combined state and local rates, and whether groceries and clothing are taxed, affect how far your dollars go day to day.

Estate and inheritance taxes

An estate tax is charged against the total value of the estate before distribution; an inheritance tax is paid by each beneficiary based on what they receive and their relationship to the deceased. For 2026, the federal estate tax exemption is $15 million per person ($30 million per couple), made permanent by the 2025 tax law. Most states have neither an estate nor an inheritance tax; a handful have one, and Maryland has both, each with its own threshold well below the federal one.

Questions to ask an advisor before moving

Should I move to a state with better tax benefits?

Not on the income tax line alone. States with no income tax often make it back through higher sales or property taxes, and some spend less on infrastructure, healthcare access, or other services. Add up every tax you'd actually pay, and factor in the non-financial reasons you'd want to live there, ideally with an advisor.

How much do tax-friendly states matter in retirement?

They matter, but the goal is a state whose total tax load you can afford in a place you actually want to live. Don't relocate just because a state skips Social Security tax; run your full retirement income against its rules, since higher-income retirees often don't qualify for the senior breaks that make a state look friendly on paper.

Which states are best for passing money to my heirs?

For 2026, the federal estate tax exemption is $15 million per person, so most estates owe no federal estate tax. State rules vary: most states have no estate or inheritance tax, but the ones that do set their own thresholds, often far below the federal level. If leaving an inheritance is a priority, read each candidate state's fine print.

Need help making sense of it all?

We're here to help you navigate your retirement journey.

Talk with a Retirable Advisor