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11 States Where Retirees Pay the Least in Total Taxes

The best destinations for freeing up money for personal needs

By Roxana Loomes , Edited by Becca Borawski Jenkins

Updated June 1, 2026

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Taxes drain thousands of dollars from savings over the course of retirement. Focusing on states without an income tax is a common strategy for those on fixed incomes. Still, other state tax burdens can significantly affect a destination's affordability.

According to a WalletHub study, property taxes, individual income taxes, and sales and excise taxes are the main categories that drain retirees' budgets. There are huge differences between states. For example, Hawaii residents pay an average total tax burden of 13.3% of personal income, while those in Alaska pay just 4.92%.

Moving to the 11 states below, including favorites like Florida and Tennessee, is one of the smart money moves for seniors who want to minimize their costs.

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Alaska

As mentioned above, Alaska has the lowest overall tax burden in the country, primarily because it lacks an income tax and a statewide sales tax. Social Security benefits and retirement-account withdrawals aren't taxed, either.

Living costs may be higher than in the lower 48, and some municipalities may impose local sales taxes, but the total tax burden is still lower than in most other states.

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New Hampshire

New Hampshire has no general sales tax and no income tax, which lowers the average resident's tax exposure to 5.38%, the second-lowest in the country.

The state compensates by imposing extremely high property taxes, so buying a home may not be a great idea if you're considering New Hampshire for retirement.

Tennessee

With low property taxes and no income tax, Tennessee often makes an appearance on "best states to retire to" lists. Its tax burden is just 6.21%, also because it doesn't tax inheritances or estates.

If there's one downside to Tennessee, it's the high 7% sales tax, which falls to 4% for groceries, and is likely to add up over time.

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Florida

The Sunshine State doesn't need to advertise its lack of income tax. Many retirees pick it for this very reason, combined with the warm weather and pristine beaches. Other advantages include modest property taxes, exemptions, and a lack of estate and inheritance taxes.

Florida's appeal is almost unblemished… until you consider insurance rates. Hurricane risks push those higher than in almost any other state in the union.

Delaware

Delaware's tax burden is just 6.28%, primarily due to its lack of state sales tax, low property taxes, and retirement-income exclusions.

Not paying sales taxes can create meaningful savings for seniors on fixed incomes, but they need to bear in mind that Delaware's cost of living and housing prices are above the national average.

South Dakota

Retirees don't pay taxes on Social Security, pensions, or retirement-account withdrawals in South Dakota. The state also has low property taxes and a light overall tax burden of 6.38%.

However, South Dakota has a 4.2% grocery tax, which is set to climb to 4.5% in 2027. It's not a deal-breaker by any means, but prospective residents should consider it when planning budgets.

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Wyoming

With a total tax burden of 6.70% of personal income, Wyoming is a good choice for those who love rural life. It has no state income tax, low property taxes, and modest sales taxes.

Although some seniors may be put off by remote living, Kiplinger ranks Wyoming among the best states for retirees, especially because it doesn't tax Social Security and inheritances.

North Dakota

It's rare to see North Dakota on retirement shortlists, but WalletHub's ranking shows it has a tax burden of only 7.02%, which is lighter than most states. While North Dakota taxes income from 401(k)s and most private pensions and has a 5% sales tax, its moderate rates and low property taxes keep the overall burden affordable.

Idaho

At 7.04%, Idaho's overall tax burden is lower than that of many neighboring Western states. The state taxes income, but has manageable property taxes and a lower-than-average cost of living.

Harsh winters and limited health care access in rural Idaho are two reasons why some seniors may trade its tax advantages for warmer or more metropolitan areas.

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Oklahoma

In Oklahoma, your overall tax burden is 7.05% of personal income, greatly helped by low property taxes. In fact, the effective property-tax rate is among the nation's lowest, and Oklahoma also offers retirees a $10,000 deduction on eligible retirement income.

While overall income is not tax-exempt in the state, the manageable housing costs and light property tax burdens keep the overall taxes manageable.

Arizona

Besides being a warm-weather favorite, Arizona entices seniors by exempting Social Security benefits and military pensions and having low property taxes.

The downside? At 5.6%, Arizona's sales tax is high compared to those of other low-tax states. However, its senior-friendly reputation is hard to beat, even as housing costs and congestion continue to grow.

Bottom line

You shouldn't decide where you will retire based on low taxes alone, although they can make a major difference in how long your savings last. Some of these 11 states with lighter overall tax burdens can help free up more money for housing, health care, travel, or everyday expenses, instead of sending it to state and local governments.

Still, taxes are only one part of the equation. Climate, health care access, housing costs, and proximity to family may matter just as much for a stress-free retirement destination.

Always compare the total tax burden, not just income taxes, before relocating. A state with no income tax may still hit retirees with high property taxes or steep sales taxes that offset the savings.

FAQs

How many states exempt Social Security income from taxes?

As of 2026, 42 states plus Washington D.C. do not tax Social Security benefits at the state level. The eight states that still tax Social Security are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont, though most of those offer partial deductions or income-based exemptions. West Virginia completed a full phase-out of its Social Security tax in 2026, joining Missouri and Kansas, which eliminated theirs in 2024, and Nebraska, which followed in 2025.

Which states exempt 401(k) and IRA withdrawals from state income tax?

Nine states have no state income tax at all, so 401(k) and IRA distributions face zero state taxation there. Four additional states (Illinois, Iowa, Mississippi, and Pennsylvania) have state income taxes but fully exempt most retirement account withdrawals. That means retirees in those states owe no state tax on distributions from 401(k)s, IRAs, or pensions, even though other income may be taxed. Note that Iowa's exemption applies to residents age 55 and older (or those who are disabled or a qualifying surviving spouse). Michigan also fully exempts most retirement income starting with the 2026 tax year, so retirees there are in a similar position.

Does Florida offer any property tax relief for retirees specifically?

Yes. Beyond the standard homestead exemption, Florida offers an additional exemption of up to $50,000 for homeowners age 65 and older whose household income falls below $38,686 (the 2026 threshold, which adjusts annually). This is a local-option program, meaning counties must adopt it, so not every Florida homeowner 65 and older automatically qualifies. The Save Our Homes cap also limits annual increases in assessed value to 3% or the rate of inflation, whichever is lower, which can meaningfully reduce tax creep for long-term residents.

Should retirees focus only on income tax when choosing a state?

No, and the total tax burden figures in this article illustrate why. A state with no income tax can still cost retirees more overall if property taxes or sales taxes are high. For example, New Hampshire has no income tax but some of the highest property taxes in the country, which is why it ranks second rather than first on the total tax burden list. Comparing total tax burden, not just income tax rates, gives a more accurate picture of what you will actually owe.

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