These US States Have the Lowest Taxes for Retirees
- - These US States Have the Lowest Taxes for Retirees
Edward ClarkDecember 26, 2025 at 12:08 AM
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Taxes can shrink a retiree’s income, even with solid savings. Some states take a smaller bite out of Social Security or pensions, while others add costs through property taxes or high sales rates.
Knowing where your money goes after you stop working matters. State tax laws aren’t always easy to compare, but some places clearly give retirees more room to live on less. This list highlights the states that consistently ease the tax load for retirees across income, property, and spending.
Alaska
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Retirees in Alaska are exempt from state income and capital gains taxes, and most areas have no sales tax. This leaves behind property taxes—averaging 1.14%—as the main recurring expense. There’s also no estate or inheritance tax. Even with its high living costs, Alaska maintains an overall tax burden below that of any other state, at 4.6%.
Wyoming
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Low taxes across the board make Wyoming consistently favorable for retirees. The state collects no income or capital gains taxes, charges a 0.58% property tax, and keeps sales taxes below 5.5%. Retirees also avoid estate and inheritance taxes, which makes Wyoming exceptionally cost-effective for homeowners and savers with varied income sources.
Mississippi
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Mississippi waives state taxes on nearly all retirement income, including pensions, IRAs, and Social Security. The rule applies broadly, not just to lower earners. The state’s property taxes stay well below average; therefore, homeownership is more affordable. Though sales tax is 7%, income flexibility gives retirees more control over how much they pay.
New Hampshire
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No income tax and no sales tax give New Hampshire a simple and predictable tax structure. Retirees keep all income from Social Security and retirement accounts. The tradeoff is a high property tax rate—averaging 1.77%—but there are no estate or inheritance taxes, and the overall system favors those with investment-heavy retirement plans.
South Dakota
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South Dakota does not tax Social Security, IRA distributions, or capital gains. Seniors over 70 can delay property tax payments through a deferral program, which helps those living on fixed incomes. The state also avoids estate and inheritance taxes, with an average property tax rate of around 1.09%.
Florida
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Florida’s reputation as a retiree magnet has tax advantages behind it. There’s no tax on Social Security, retirement income, or investment withdrawals. Property tax runs about 0.79% on average. Though state and local sales taxes approach 7%, groceries and prescriptions are exempt.
Nevada
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Unlike most states with high sales taxes, Nevada doesn’t tax groceries or medications, which helps offset its 8.24% average rate. This includes no tax on Social Security or pension withdrawals. Property taxes are low at 0.49%, and there’s no estate or inheritance tax. Groceries and medicine are exempt from sales tax, despite the average rate exceeding 8%.
Tennessee
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With a cost-of-living index below 91 and no state income tax, Tennessee keeps retiree expenses manageable. Property taxes are among the lowest nationally at 0.55%. While the state has one of the highest sales tax rates, reduced taxes on food and prescription drugs make daily purchases less burdensome than the top-line number suggests.
Texas
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Texas doesn’t tax income, retirement-related or otherwise. However, property taxes average 1.58%. Homeowners over 65 can claim exemptions to reduce their tax liability. There’s no tax on estate transfers or investment gains.
Washington
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Although Washington introduced a capital gains tax on profits over $250,000, retirees with modest investment income remain unaffected. The state imposes no income tax and doesn’t tax retirement withdrawals or Social Security. Property and sales taxes hover near national averages, and there's no estate or inheritance tax for most estates.
Source: “AOL Money”
