Best States to Retire with No State Income Tax (2026 Guide)

The no-income-tax pitch for retirees is real but oversimplified. State income tax is one of four state/local revenue lines — the others are property tax, sales tax, and excise/franchise taxes — and states without an income tax always make it up somewhere. For retirees specifically, what matters is the total burden on a household drawing Social Security plus retirement-account distributions, plus the cost of property and healthcare.

The nine no-income-tax states

Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and Alaska have no broad-based individual income tax. New Hampshire taxes interest and dividends but not wage or retirement income, with that tax phasing out by 2027.

Of these, Texas and New Hampshire have the highest property tax burden; Washington has a high sales tax and a recently enacted capital gains tax; Tennessee, Florida (inland), and South Dakota currently offer the cleanest 'low total burden' profile.

Florida

Florida is the default choice — by far the largest 65+ population share among the no-income-tax states, mature retirement infrastructure, no estate or inheritance tax, and Social Security is exempt (it always is at the federal level for most retirees, but Florida adds no state layer).

The catch is property insurance. Coastal and southern Florida ZIPs have seen homeowners insurance double in five years, and the impact on a retired household on a fixed income is significant. Inland Florida (the Panhandle, north-central) avoids most of this. See our Florida-specific retirement guide for ZIP-level detail.

Tennessee

Tennessee phased out its last income tax (the Hall tax on investment income) in 2021. Property tax is among the lowest in the country (effective rate around 0.6–0.7%), and home prices in retirement-popular areas (Knoxville, Chattanooga, the Smokies foothills, Murfreesboro) remain well below the national median. Sales tax is high (9–10% combined), which matters less for retirees who spend a smaller share on goods.

Texas

Texas suits retirees who own a low-value home (where property tax is low in absolute terms) and want a large healthcare ecosystem. The Hill Country (Boerne, Fredericksburg) and East Texas (Tyler, Lufkin) are the most retiree-popular regions. Big metro suburbs (Plano, The Woodlands) work for affluent retirees but property tax bills can reach $10,000–$15,000/year.

Nevada and Wyoming

Nevada works for retirees who want desert climate, no income tax, no estate tax, and access to the Las Vegas healthcare market. Outside Vegas and Reno, options are thin. Wyoming has the lowest overall tax burden of any state but extremely limited population, healthcare, and climate that excludes most retirees.

What no-income-tax does NOT save retirees

Social Security is federally tax-advantaged everywhere — most retirees already pay no state tax on Social Security in any state. The states that matter for the income tax calculation are those that tax 401(k), IRA, and pension distributions: California, Connecticut, and a handful of others. Many states with an income tax (Pennsylvania, Mississippi, Illinois) fully exempt retirement income, so they function like no-income-tax states for retirees.

Always model: federal tax + state income tax on retirement distributions + property tax + sales tax + healthcare cost. The state with the lowest sticker tax doesn't always come out cheapest.