The most tax friendly states for retirees is an important thing to know if you're looking to retire somewhere in the U.S. but you're not sure where to go. One of the big things you may be thinking of is cost of living. How much do things like homes, groceries and healthcare cost in your chosen city?
But listen, you shouldn’t just be thinking of how much you’ll spend. You really need to think about how much you can save. You can maximize your current financial situation by moving to one of the tax friendly states for retirees.
Think about it...why would you hand more of your hard-earned money to the government? If you’re open to retiring anywhere in the U.S., you absolutely have a choice to keep more of your earnings. So let’s get started reviewing your best options when it comes to taxes.
Our 2023 update showed States are providing property tax relief for their residents.
Most Tax Friendly States for Retirees
#1 - Alaska
2023 update - no changes
If you love nature and adventure, Alaska could be the state for you. Alaska is one of the most beautiful states in the U.S. with it’s majestic mountains and abundant wildlife. It’s a hikers paradise! It also happens to be the most tax friendly state for retirees.
Item | Info |
|---|---|
State Income Tax Rate | 0% |
State Sales Tax Rate | 0% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 1.17% |
65+ Homestead Exemption |
#2 - Wyoming
2023 update - property taxes fell about 10% and state sales tax held steady.
Another state for nature lovers. Wyoming is home to Yellowstone Park and has miles of rugged landscapes to explore. But...you must be good with cold weather as average lows in January are from 0°F to 18°F. I know that doesn't scare many of you away from this beautiful state that earned the number 2 spot in the most tax friendly states for retirees.
Item | Info |
|---|---|
State Income Tax Rate | 0% |
State Sales Tax Rate | 4% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 0.55% |
65+ Homestead Exemption |
#3 - Florida
2023 update - average property tax rate went up about 5%
There are a lot of reasons why people love to retire in Florida. A laid back lifestyle combined with gorgeous beaches and a lower cost of living make it appealing. Add to it that Florida is one of the most tax friendly states for retirees and you have a winner. It shouldn’t come as a surprise that it is ranked third.
Item | Info |
|---|---|
State Tax Rate | 0% |
State Sales Tax Rate | 6% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 0.98% |
65+ Homestead Exemption |
#4 - Mississippi
2023 update - 7% average decrease in property tax rate
Another warm-weather state! From Jackson to Biloxi, Mississippi has so much to offer for retirees including a low cost of living. Its position as one of the most tax friendly states for retirees make it even more attractive for those looking for that special place to enjoy their retirement.
Item | Info |
|---|---|
State Tax Rate | 0% |
State Sales Tax Rate | 7% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 0.75% |
65+ Homestead Exemption |
#5 - Nevada
2023 Update - Average property tax rate lowered by 25% to .48%!
Nevada is the place if you love a dry climate and the desert as your backdrop. But even if you’re not into the desert, travel up towards Reno for a change of pace. It’s home to one of the most visited places in the world, Las Vegas, and comes in as the 5th most tax friendly states for retirees. If you're interested in this exciting city, check out our Retiring in Las Vegas blog.
Item | Info |
|---|---|
State Tax Rate | 0% |
State Sales Tax Rate | 6.85% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 0.48% |
Homestead Exemption | No 65+ exemptions |
#6 - South Dakota
2023 Update - 18% reduction in average property tax rate
South Dakota was voted the #2 state for quality of life (USNews). For nature lovers and those looking to retire in a place that offers the feeling of being far away from the rat race, this may be the place. You'll get the opportunity to breath and enjoy the raw beauty of nature. In this case, the state is coming in at #6 due to it being quite tax friendly for retirees.
Item | Info |
|---|---|
State Tax Rate | 0% |
State Sales Tax Rate | 4.5% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Not Taxed |
Effective Real Estate Tax Rate | Avg 1.08% |
65+ Homestead Exemption | Not available but other reductions are. |
#7 - Tennessee
2023 Update - 23% reduction on average property tax rate.
Tennessee is a new edition to the list for 2021. The state has been moving to be a zero income tax state which makes it attractive for retirees. Tennessee is home to Nashville which is a popular retirement destination. It's within driving distance to many exciting cities for long weekends, has the Tennessee Titans and of course, it is the country music capital of the world! If you're interested in the Nashville area, check out our Retiring in Nashville podcast!
Item | Info |
|---|---|
State Tax Rate | 0% |
State Sales Tax Rate | 7% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Not Taxed |
Public/Private Pension Income | Partially Taxed |
Effective Real Estate Tax Rate | Avg 0.56% |
65+ Homestead Exemption | Tenn. Code Ann. § 26-2-301. |
#8 - Georgia
2023 Update - 11% reduction in average property tax rate
Georgia is an attractive retirement destination for those who may love big city life in or near Atlanta, coastal areas along the Atlantic or the beauty of the mountains near the Tennessee border. It comes in at number 8 for the most tax friendly states for retirees.
Item | Info |
|---|---|
State Tax Rate | Graduated 1% to 5.75% |
State Sales Tax Rate | 4% |
Estate and Inheritance Tax | Not Taxed |
Social Security Income | Not Taxed |
Retirement Acct Withdrawals | Partially Taxed |
Public/Private Pension Income | Partially Taxed |
Property Taxes | Avg 0.81% |
65+ Homestead Exemption |