Retirement Retirement Planning

10 States With the Best Tax Breaks for Retirees

These can be the perfect places to spend your golden years if your budget is tight.

By Sandy Baker

Edited by Chris Kissell

Updated Feb. 17, 2025

When you think about retirement, warm days and a beautiful landscape might be at the top of your list. But don't overlook the importance of affordability.

Yes, you can tighten your belt or try to make cash on the side just so you can get by. But choosing a place where your money goes further tends to be a better bet.

In a breakdown of the states with the best retiree tax breaks, Kiplinger looked at the top states that don't tax retirement benefits and ranked them based on the lowest median property taxes paid, according to data from the U.S. Census Bureau.

Here are the top 10 states with the best tax breaks for retirees.

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Texas

Texas has no state income tax, and that means no tax on your retirement income too. You also will not owe state estate or inheritance taxes.

The median property tax bill was $3,872, which is a bit higher than some other states but still relatively affordable.

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Alaska

Alaska does not have a state income tax, which means that your Social Security retirement benefits and pension payments are tax-free when you retire here. There is also no sales, inheritance, or estate tax in Alaska.

As for property taxes, the median property tax bill is $3,687. Alaska also has the Permanent Fund Dividend that actually offers a yearly check to people who live in the state.

Pennsylvania

Retirement income is not taxed in Pennsylvania. If you decide to work, you will pay a low flat-tax rate of 3.07%. If you're over 60, you don't pay taxes on pensions either. Your heirs, though, may pay high inheritance taxes.

Median property taxes stand at $3,100, although some residents might be eligible for a rebate on these taxes.

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Iowa

Since 2023, Iowa has not taxed retirement income. If you have other types of income, tax brackets don't go higher than 6%. And in 2026, the state will move to a 3.9% flat rate income tax on income.

Property taxes sting a bit less here, with a median bill of $3,000, which is lower than in many other states.

South Dakota

If you dream of wide-open landscapes, then South Dakota might be the place for you. It also appeals to those who don't want to be taxed, since there is no income tax in the state and no inheritance or estate tax.

Another nice benefit is the lower median property tax bill of $2,496. However, you will pay a grocery tax rate of 4.2%.

Florida

Florida's weather and upscale living make it a desirable place to retire. You can also get ahead financially here: There is no state income tax. In addition, there is no inheritance or estate tax.

The median property tax is an affordable $2,386. If you meet specific criteria, such as living in your home for at least 25 years, you may even be able to take a homestead exemption equivalent to the entire taxable value of your home.

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Nevada

The benefits of retiring in Nevada include no state income tax, no estate tax, and no inheritance tax. The sales tax here is high, however, with average state and local sales tax reaching 8.24%.

As for the median property tax bill, it's just $1,884, which is a fraction of what you would owe in many other states.

Wyoming

Wyoming's natural wonders make it an attractive place to retire. There are no taxes related to income, estate, or inheritance.

You will find the median property bill is just $1,567, much lower than in other places. Note that if you drive an electric vehicle, you will have to pay an annual $200 decal fee.

Tennessee

In Tennessee you won't owe income, estate, or inheritance taxes.

The median tax bill is also attractive, at less than $1,400. The sales tax rate here is 7%, and additional local taxes may apply. In fact, the average combined state and local sales tax rate is 9.55%. There is also a 4% grocery tax.

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Mississippi

In Mississippi, you will not pay taxes on retirement income. There is also no estate or inheritance tax. The state also offers an overall low cost of living.

The median property tax is just $1,145. Perhaps the biggest negative is that Mississippi has a grocery tax rate of 7%, the highest in the country.

Bottom line

Choosing a place to retire means carefully considering how far your retirement savings will go so you can get ahead financially. Living in a state with a low tax burden can help you stretch your dollars.

Is there a perfect place to retire? One of these locations might fit the bill if you want a bit of extra money in your budget to travel or just hope to enjoy life without having to participate in the daily grind.

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