Question 1

Which states are the most tax-friendly for retirees?

Accepted Answer

The most tax-friendly states for retirees are Wyoming, Florida, Tennessee, Nevada, South Dakota, and Texas — all have no state income tax, don't tax Social Security or retirement income, and have no estate or inheritance tax. Alaska is tied but has a much smaller retiree population. Alabama, Mississippi, and Illinois are standouts among income-tax states because they fully exempt all retirement income (SS, pensions, 401(k)/IRA).

Question 2

Which states tax Social Security?

Accepted Answer

As of 2024, nine states tax Social Security: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. All of them exempt SS below moderate-income thresholds. Missouri, Nebraska, and Kansas eliminated their SS tax in 2024. West Virginia's SS tax phases out completely by 2026. The other 41 states (plus DC) do not tax Social Security.

Question 3

Which states have no state income tax?

Accepted Answer

Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire (also eliminated its former interest/dividends tax in 2025), South Dakota, Tennessee (eliminated Hall Tax in 2021), Texas, Washington (but has a 7% capital-gains tax on gains above $270K/yr), and Wyoming. These states rely on sales tax, property tax, or resource-extraction revenue instead.

Question 4

Which states have an estate tax?

Accepted Answer

Twelve states plus DC have a state estate tax: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington. Most have exemptions between $1M (Oregon) and $13.61M (Connecticut, matched to federal). Massachusetts ($2M) and Oregon ($1M) have the lowest thresholds — important for high-net-worth retirees. Six states have inheritance tax: Iowa (phased out 2025), Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

Question 5

Can I avoid state income tax by moving in retirement?

Accepted Answer

Yes, but only by fully establishing residency (domicile) in the new state. This typically requires spending the majority of the year there, getting a new driver's license and voter registration, and severing ties with the old state. High-tax states like California and New York aggressively audit departing residents and may claim partial-year residency for years after the move. Retirees should plan the domicile transition with a CPA and document it thoroughly.

Retire in the United States

Most Tax-Friendly States for Retirees

Nevada

Wyoming

Tennessee

Florida

Alaska

South Dakota

Texas

New Hampshire

Washington

States With No Income Tax (9)

States With Flat Income Tax (14)

States With Progressive Income Tax (28)