10 Tax-Friendly States for Retirees in 2026: Social Security, Income, and Property Taxes

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State taxes can affect retirement cash flow, but there is no single “best” state for every retiree. A state with no personal income tax may still have higher housing costs, property taxes, sales taxes, insurance premiums, or other expenses.

This guide compares 10 states with notable retirement-tax features for 2026. Nine have no broad individual income tax, while Delaware is included because it excludes Social Security benefits and offers a retirement-income exclusion for many older residents.

State rules are separate from federal taxation. Review federal Social Security tax rules before estimating your total retirement tax bill. For a state-by-state list of places that may still tax part of Social Security benefits, see Which States Tax Social Security Benefits?

Retired couple walking on a beach while considering retirement finances

Retirement location decisions should consider taxes, housing, health care, insurance, and family priorities together.

Important Reminder

No state income tax does not eliminate federal income tax. Social Security, Traditional IRA withdrawals, 401(k) distributions, pensions, dividends, and capital gains can still affect your federal return.

1. Ten States to Compare for Retirement Taxes

State Retirement Tax Feature Other Factors to Review
Alaska No state individual income tax. Alaska also has no statewide general sales tax. Municipal sales taxes, local property taxes, housing costs, and access to services can vary widely by location.
Florida No personal income tax. Social Security, pensions, IRA withdrawals, and 401(k) withdrawals are not subject to Florida individual income tax. Compare county property taxes, homeowners insurance, flood risk, and local sales surtaxes.
New Hampshire The former Interest and Dividends Tax was repealed for tax periods beginning on or after January 1, 2025. Property-tax costs and local housing costs should be part of the comparison.
Nevada No state individual income tax on wages, pensions, Social Security, or retirement-account withdrawals. Sales taxes, property taxes, homeowners association fees, and health care access vary by city and county.
South Dakota No state individual income tax. The state also does not impose estate or inheritance tax. Sales taxes and local property-tax rules still affect annual spending.
Tennessee The Hall Income Tax was repealed for tax years beginning on or after January 1, 2021. Tennessee does not impose a broad individual income tax. Compare sales-tax rates, county property taxes, and housing costs.
Texas No state individual income tax. Retirement income is not subject to Texas individual income tax. Property taxes are levied locally, and sales taxes can include local additions.
Washington No personal income tax. However, Washington imposes a tax on certain net long-term capital gains, with special rules and exclusions. Investment-sale planning can matter more for retirees with taxable brokerage assets.
Wyoming No state individual income tax. Social Security, pension income, and retirement-account withdrawals are not subject to a Wyoming individual income tax. County-level property taxes, sales taxes, climate, and access to health care deserve careful review.
Delaware Social Security and Railroad Retirement benefits are not taxable. Residents age 60 or older may generally exclude up to $12,500 of qualifying pension and retirement income. Delaware has a personal income tax on other taxable income, so estimate the full effect of IRA, 401(k), pension, and investment income.

2. Why a “No Income Tax” State May Not Be the Lowest-Cost Choice

Income tax is only one part of a retirement budget. A full comparison should include the taxes and recurring costs you expect to pay every year.

  • Property taxes: These are often determined locally and can vary significantly within the same state.
  • Sales and use taxes: Rates can differ by city, county, and the types of goods or services purchased.
  • Homeowners, flood, and wind insurance: Insurance costs can materially affect retirement cash flow in coastal, wildfire-prone, or storm-prone areas.
  • Health care and long-term care access: Premiums, provider availability, and travel distance can be as important as tax savings.
  • Estate and inheritance rules: These may matter for households with larger estates or specific family-planning goals.

A useful comparison starts with your expected annual income: Social Security, pension payments, Traditional IRA and 401(k) withdrawals, Roth IRA withdrawals, dividends, interest, capital gains, and part-time work income.

3. Special Planning Notes for Washington and Delaware

Washington: Review Taxable Brokerage Sales

Washington does not impose a general personal income tax. However, it has a capital gains tax on certain net long-term gains from the sale or exchange of qualifying long-term capital assets. This is different from a general tax on wages, Social Security benefits, pensions, or retirement-account withdrawals.

Retirees with large taxable investment accounts should review Washington’s current exemptions, deductions, and filing rules before selling appreciated investments.

Delaware: Social Security Exclusion Plus Retirement-Income Relief

Delaware excludes Social Security and Railroad Retirement benefits from taxable income. It also offers a retirement-income exclusion for eligible pension and retirement-account income. For taxpayers age 60 or older, the combined exclusion is generally limited to $12,500 per person. Taxpayers under age 60 may qualify for a smaller pension exclusion.

Because Delaware still has a personal income tax, retirement-income planning should consider the timing of Traditional IRA distributions, Roth conversions, and taxable investment sales.

4. Establishing Residency After a Move

Buying a home in another state does not automatically end tax residency in your former state. States use their own residency and domicile rules. A 183-day test may be relevant in some states, but it is not the only factor used to determine residency.

When changing your primary residence, keep records that support where you actually live and maintain your primary home. Common factors can include your home address, time spent in each state, driver’s license, voter registration, vehicle registration, mailing address, financial accounts, and community connections.

Before moving for tax reasons, review the residency rules for both the state you are leaving and the state you are entering. Multi-state situations can be complex, especially for people who keep more than one home.

5. A Retirement Location Tax Checklist

  1. Estimate your federal taxable income and potential federal Social Security taxation.
  2. Confirm whether the state taxes Social Security, pension income, IRA distributions, 401(k) withdrawals, and capital gains.
  3. Check state-specific retirement-income exclusions, credits, age requirements, and income phaseouts.
  4. Compare county-level property taxes, insurance costs, housing prices, and sales taxes.
  5. Review residency and domicile rules before changing your primary residence.
  6. Recheck official guidance each year because state rules and thresholds can change.

The most suitable retirement location is usually the one that balances your taxes with health care, family, climate, housing, transportation, and long-term lifestyle priorities.

Sources and Further Reading

Last reviewed: July 2026

Educational disclaimer: This article is for general educational purposes only and is not tax, legal, investment, or financial advice. Tax rules, income exclusions, credits, residency standards, and local taxes can change. Your result depends on your income, filing status, household, property, and state residency. Review current official guidance and consult a qualified tax professional before making a relocation or retirement-income decision.

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