15 Best States for Retirees (Tax Edition) 2025
Where your Social Security, pension, and retirement income go furthest
9 states tax NONE of your retirement income. Save $4,000-8,000/year.
How We Ranked the States
We evaluated all 50 states + DC based on these retirement-specific tax factors:
Ranking Criteria:
- Social Security Tax: 0% is best (41 states don't tax it)
- Pension/401(k)/IRA Tax: 0% is best
- Overall Income Tax Rate: Lower is better
- Property Tax: Considering homestead exemptions for seniors
- Estate/Inheritance Tax: None is best
- Senior-Specific Breaks: Bonus points for age 65+ exemptions
💰 Real Retirement Example
Retiree with $60,000 annual income:
- $30,000 Social Security
- $20,000 Pension
- $10,000 401(k) withdrawals
In Florida (0% tax): Pay $0 state tax
In California: Pay ~$1,700/year state tax
In New York: Pay ~$2,400/year state tax
Over 20-year retirement: Save $34,000-48,000 in Florida!
Tier 1: Perfect Tax Haven States (0% on Everything)
These 9 states have NO income tax at all - meaning $0 tax on Social Security, pensions, 401(k) withdrawals, or any other retirement income:
🏖️ Florida TIER 1
Tax Benefits:
- ✅ 0% tax on ALL retirement income
- ✅ No estate or inheritance tax
- ✅ Homestead exemption (up to $50k off property value)
- ✅ Additional senior property tax breaks (65+)
Why Retirees Love It:
- Warm weather year-round
- 1,350 miles of beaches
- Massive retiree communities
- Excellent healthcare infrastructure
- No snow shoveling!
The Trade-Off:
- Hurricane risk (June-November)
- Hot, humid summers
- Higher insurance costs (home, flood)
Average Annual Savings vs NY: $4,200 on $60k retirement income
→ Florida Tax Calculator | NY vs FL Comparison
⭐ Texas TIER 1
Tax Benefits:
- ✅ 0% tax on ALL retirement income
- ✅ No estate tax
- ✅ Constitutional prohibition on income tax (can't change easily)
Why Retirees Love It:
- Affordable cost of living
- Warm winters (no snow)
- Strong economy (jobs for adult children)
- No state income tax ever!
The Trade-Off:
- Property tax is higher (1.6% average)
- Hot summers (100°F+)
- Hurricane risk (coastal areas)
Average Annual Savings vs CA: $3,400 on $60k retirement income
→ Texas Tax Calculator
🌲 Washington TIER 1*
Tax Benefits:
- ✅ 0% tax on retirement income
- ✅ No estate tax (under $2.193M)
- ⚠️ *7% capital gains tax on gains over $250k (won't affect most retirees)
Why Retirees Love It:
- Beautiful Pacific Northwest
- Mild summers (unlike Texas/Florida)
- Access to Seattle healthcare
- Outdoor recreation paradise
The Trade-Off:
- Rainy (especially Seattle)
- High cost of living (near Seattle)
- Property prices rising
→ Washington Tax Calculator
🎸 Tennessee TIER 1
Tax Benefits:
- ✅ 0% tax on ALL retirement income (since 2021)
- ✅ No estate tax
- ✅ Affordable property taxes
Why Retirees Love It:
- Low cost of living
- Mild winters (compared to North)
- Music scene (Nashville, Memphis)
- Southern hospitality
- Great BBQ!
The Trade-Off:
- Sales tax is high (9.5% average)
- Humid summers
- Tornado risk
→ Tennessee Tax Calculator
🎰 Nevada TIER 1
Tax Benefits:
- ✅ 0% tax on ALL retirement income
- ✅ No estate tax
Why Retirees Love It:
- Dry climate (good for arthritis)
- Las Vegas entertainment
- Affordable outside Vegas
- Desert beauty
The Trade-Off:
- Very hot summers (110°F+)
- Limited water resources
- Las Vegas can be overwhelming
→ Nevada Tax Calculator
Other 0% Tax States:
- Alaska - Plus Permanent Fund Dividend! But very cold. Calculate
- Wyoming - Lowest overall tax burden. Cold winters. Calculate
- South Dakota - Low cost, but cold. Calculate
- New Hampshire - NEW for 2025! Repealed I&D tax. Beautiful but cold/expensive. Calculate
Tier 2: States with Major Retirement Tax Breaks
These states DO have income tax, but offer special exemptions for retirees:
🔔 Pennsylvania TIER 2
Tax Benefits:
- ✅ 0% tax on retirement income (pensions, 401(k), IRA, Social Security)
- ✅ Only wages are taxed at 3.07% flat rate
- ✅ If you're fully retired (no wages), you pay $0 state tax!
Why Retirees Love It:
- Four distinct seasons
- Affordable cost of living
- Excellent healthcare (Pittsburgh, Philly)
- Rich history and culture
The Trade-Off:
- Cold winters
- High local taxes in some areas
- PA does tax wages if you work part-time
Best For: Fully retired folks who want East Coast lifestyle without FL humidity
→ Pennsylvania Tax Calculator
🌾 Mississippi TIER 2
Tax Benefits:
- ✅ 0% tax on Social Security
- ✅ Full exemption on retirement income (pensions, 401(k), IRA) for taxpayers of ANY age
- ✅ 4.4% flat rate only on non-retirement income over $10k
- ✅ Low cost of living
Why Retirees Love It:
- Extremely affordable
- Southern charm
- Mild winters
- Low property taxes
Best For: Retirees on fixed budgets who want warm weather affordably
→ Mississippi Tax Calculator
🌴 Hawaii TIER 2*
Tax Benefits:
- ✅ 0% tax on Social Security
- ✅ Pension/retirement income exemption for 65+ (up to certain limits)
- ⚠️ But: 11% top rate on other income (among highest in US)
Why Retirees Love It:
- Paradise weather year-round
- Beaches everywhere
- Aloha lifestyle
- Excellent healthcare
The Trade-Off:
- VERY expensive (housing, groceries)
- Far from mainland (expensive flights)
- High cost of living offsets tax savings
Best For: Wealthy retirees who prioritize lifestyle over savings
→ Hawaii Tax Calculator
🌊 Delaware TIER 2
Tax Benefits:
- ✅ 0% tax on Social Security
- ✅ $12,500 pension/retirement income exclusion (60+)
- ✅ No sales tax!
- ✅ Affordable property taxes
Why Retirees Love It:
- Beaches (Rehoboth, Bethany)
- No sales tax (shopping paradise)
- Mild climate
- Close to major cities (Philly, DC)
Best For: East Coast beach lovers who want lower taxes than NJ/MD
→ Delaware Tax Calculator
🏔️ Arizona TIER 2
Tax Benefits:
- ✅ 2.5% flat rate (LOWEST in nation for income-tax states)
- ✅ 0% tax on Social Security
- ✅ Warm, dry climate (good for arthritis)
- ✅ Affordable compared to CA
Why Retirees Love It:
- Warm winters (snowbirds flock here)
- Desert beauty
- Golf paradise
- Growing healthcare infrastructure
- Major CA exodus destination
The Trade-Off:
- Very hot summers (115°F+)
- Water scarcity concerns
Best For: Active retirees who golf, love heat, and want CA weather at half the cost
→ Arizona Tax Calculator
🌵 New Mexico TIER 2
Tax Benefits:
- ✅ 0% tax on Social Security
- ✅ Pension/retirement income exemption (65+)
- ✅ Very low cost of living
Why Retirees Love It:
- Affordable (median home $280k)
- Unique culture (art, food)
- Dry climate
- Beautiful landscapes
→ New Mexico Tax Calculator
States to AVOID for Retirement (Tax Perspective)
❌ Worst States for Retiree Taxes:
| State |
Social Security Tax? |
Pension Tax? |
Income Tax Rate |
Why It's Bad |
| California |
NO |
YES (13.3% top) |
1%-13.3% |
Highest rate + expensive |
| Minnesota |
YES* |
YES (9.85% top) |
5.35%-9.85% |
Taxes SS + high rates + cold |
| Vermont |
YES* |
YES (8.75% top) |
3.35%-8.75% |
Taxes SS + expensive + very cold |
| Connecticut |
PARTIAL |
YES (6.99% top) |
2%-6.99% |
High property tax + expensive |
| New Jersey |
NO |
YES (10.75% top) |
1.4%-10.75% |
2nd highest rate + high property tax |
*Note: Some provide exemptions for low-income seniors, but most retirees with decent income will pay.
Social Security Tax: State-by-State
States That Tax Social Security (9 total):
- Colorado
- Connecticut (partial)
- Minnesota
- Montana
- New Mexico (partial)
- Rhode Island
- Utah
- Vermont
- West Virginia (being phased out)
All other 41 states + DC: Do NOT tax Social Security benefits
The Complete Picture: Tax + Cost of Living
⚠️ Remember: Taxes Aren't Everything!
A state with 0% income tax might cost more overall. Consider:
- Property Tax: Can be $6k-10k/year in high-tax states
- Sales Tax: Adds up if you're shopping a lot
- Cost of Living: Housing, groceries, healthcare
- Healthcare Access: Critical for retirees
- Climate: Affects quality of life and health
- Proximity to Family: Priceless
💡 The Winner for Most Retirees:
Florida consistently ranks #1 because:
- 0% tax on ALL retirement income
- Warm weather year-round
- Massive retiree infrastructure
- No estate tax
- Homestead exemption + senior breaks
- Affordable compared to Northeast
- Excellent healthcare (Mayo Clinic, Cleveland Clinic, etc.)
2nd Place: Texas - 0% tax, affordable, warm, but hotter summers
3rd Place: Arizona - Low tax (2.5%), warm, golf paradise, CA exodus
How Much Can You Actually Save?
| Annual Retirement Income |
High-Tax State (NY) |
Low-Tax State (FL) |
Annual Savings |
20-Year Savings |
| $40,000 |
~$1,200 |
$0 |
$1,200 |
$24,000 |
| $60,000 |
~$2,400 |
$0 |
$2,400 |
$48,000 |
| $80,000 |
~$4,200 |
$0 |
$4,200 |
$84,000 |
| $100,000 |
~$6,200 |
$0 |
$6,200 |
$124,000 |
Note: These are estimates. Actual savings depend on income sources, deductions, and state-specific rules.