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 recent breakdown of the states with the best retiree tax breaks, Kiplinger looked at the 13 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.
Make Money: 8 things to do if you're barely scraping by financially
10. 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.
Own a car? Here's 7 warning signs you're paying too much for car insurance. 9. 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.
8. 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.
Avoid these money mistakes: 9 dumbest things smart people waste money on
7. 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.
6. South Dakota
If you dream of wide-open landscapes, South Dakota might be the place for you. It also appeals to those who don’t want to be taxed — 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%.
5. 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.
Get Out of Debt for Good: Try these 6 clever ways to crush your debt 4. 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 8.23%.
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.
3. Wyoming
Wyoming's natural wonders make it an attractive place to retire. There is no income tax and no estate or inheritance taxes.
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.
2. 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 a 4% grocery tax.
Grow Your $$: 11 brilliant ways to build wealth after 40
1. 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.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
Local News
