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A no-income-tax state is not automatically cheaper for retirees than a state with a low income-tax rate or retirement-income exemptions. The cheaper choice depends on how each state treats your particular income, plus your home’s property-tax bill, taxable spending, and local costs. Compare the same household, home, and spending assumptions in each place; a state label or statewide ranking cannot settle the question for you.
At a glance
| Name | Best for | Key spec | Checked |
|---|---|---|---|
| No individual income tax | Retirees whose income sources would otherwise be subject to state income tax, provided other costs do not outweigh the savings | Tax Foundation lists Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming; Washington taxes capital gains for qualifying high earners | November 2026 |
| Low income tax or retirement-income exemptions | Retirees whose income is largely exempt or whose total costs are lower after accounting for property and sales taxes | Tax treatment varies by income source and state; Pennsylvania exempts Social Security and pension income, while other income may be taxable | November 2026 |
Why doesn’t the label tell me which state is cheaper?
“No income tax” describes one part of a tax bill, not the whole cost of living in a state. State and local governments can also collect property, sales, excise, and other taxes. As Kiplinger’s 2026 retiree tax guide puts it, “Keep in mind that no state has zero taxes, so where some taxes are low, other types might be high.”
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The practical question is not just how much income tax a state charges. It is how much your household is likely to pay in state and local income, property, and sales taxes under that state’s rules. A retiree with taxable withdrawals, a high-value home, and substantial taxable spending can reach a different result from a renter with mostly exempt income and a modest spending budget—even if they compare the same two states.
There is also no single meaning of “low-income-tax state” that resolves the comparison. One state may have a low headline rate but tax a particular source of retirement income; another may exempt that source while collecting more through property or sales taxes. No universal cheapest state or household-level answer follows from the labels alone. Treat the categories as starting points for a calculation, not verdicts.
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It also helps to separate tax costs from the wider cost of moving. Housing prices, insurance, utilities, transportation, and moving expenses can affect whether a location fits your budget, but they are not state income, property, or sales taxes. If you want to answer both “Which state has the lower tax bill?” and “Where will I spend less overall?”, keep two comparisons rather than blending them into one figure.
Which income sources should I compare?
List each source separately. A state can treat Social Security, pensions, traditional retirement-account withdrawals, Roth distributions, interest, dividends, capital gains, and part-time wages differently. “Retirement income” is not one uniform tax category, and assuming that all—or none—of it is taxable can make a comparison misleading.
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- Social Security: Check the state’s treatment directly rather than inferring it from the income-tax label.
- Pensions: Confirm how the state treats each pension you receive; public and private pensions should not be assumed to share the same rule.
- Traditional IRA and 401(k) withdrawals: Check whether withdrawals are included in taxable income and whether an exemption applies.
- Roth distributions: Verify the state’s treatment for the distribution type relevant to you; do not assume it matches the federal or another state’s treatment.
- Interest, dividends, and capital gains: Check each category. A state can have no broad individual income tax and still impose a tax on a specific kind of income or qualifying taxpayer.
- Part-time wages: Include them if you expect to work after moving. A retiree’s tax comparison should reflect the household’s actual income mix, not just benefits and pensions.
For a useful inventory, note the expected annual amount from each source as well as its type. If you and a spouse have different pensions, or only one of you expects to earn wages, keep those streams separate. A state exemption may apply to one category but not another, or may depend on conditions you need to check. The point is not to assume an exemption exists; it is to give each state’s current rules the right facts to work with.
The contrast between Washington and Pennsylvania shows why this inventory matters. The AARP guide to states without an income tax says Washington does not tax Social Security, 401(k) distributions, or pensions at the state level, but does tax capital gains for qualifying high earners. The Pennsylvania Independent Fiscal Office says the state exempts Social Security and pension income when received, while other income may be subject to income tax. These examples illustrate different rules; they do not by themselves establish which state would cost a particular retiree less.
For a broader starting list, the Tax Foundation’s 2026 individual-income-tax tables identify Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming as states with no individual income tax. New Hampshire’s tax on interest and dividend income ended effective January 1, 2025, according to the same source. Washington’s capital-gains tax is an important qualification to a simple “no tax on all income” description.
Do not let the word “income” in a state’s tax label do too much work. The comparison is about the categories that actually apply to your household, not a general description of whether the state taxes income in some form. If your income mix changes—for example, because you take a larger withdrawal, sell an investment, or add part-time work—revisit the comparison rather than carrying forward an estimate built on last year’s sources.
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Use the likely bill on the home you would actually occupy, in the specific county or municipality—not a state average alone. Homeownership can outweigh a difference in income tax, while a renter’s exposure may look different. If you plan to buy, compare plausible homes and locations rather than applying one statewide rate to an assumed house value.
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Then check any property-tax relief you may qualify for. Age, income, disability, veteran status, and homestead status can affect relief programs. Eligibility and the resulting bill depend on the applicable state and local rules, so do not count a discount in your estimate until you have verified that you qualify where you plan to live.
AARP’s 2026 guide reports effective property-tax rates of 0.49% for Nevada and Tennessee and 1.41% for New Hampshire among the examples it discusses. Those are source-reported rates, not predictions of an individual homeowner’s bill. They are useful as prompts to investigate local costs, but they should not be mixed into a precise comparison as though they use the same home value, relief eligibility, or locality as your own situation.
For a homeowner, ask for or estimate the annual tax on the specific property, taking account of the applicable locality and any relief you have confirmed. If you have not selected a home, use a range of plausible home prices and locations, and label the result as an estimate. This can expose a hidden sensitivity: the state that looks less costly for one home may not remain so for a more expensive home or a different municipality.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsFor a renter, do not simply assign the homeowner’s property-tax rate to your rent. The property-tax comparison is not the same as your direct annual bill, and the figures above do not establish how a landlord’s costs affect your rent. Keep the housing expense in your broader budget, while recording your direct property tax as zero if you do not own the home. Do not treat that as proof that the rental location is cheaper overall.
How much can sales taxes matter?
Estimate sales tax from your likely taxable spending, not from a state rate viewed in isolation. Your spending mix matters: exemptions and local rates affect what you actually pay, and a higher combined rate has more impact when a larger share of your budget goes to taxable purchases.
AARP’s 2026 guide reports average combined state and local sales-tax rates of 5.56% in Wyoming, 6.11% in South Dakota, and 9.61% in Tennessee. These are reported averages, not a quote for a particular town or a guarantee that every purchase is taxed at that rate. Use them to identify where local verification is especially important, then check the rules and rates for the location and purchases you expect.
Do not assume that a state with no individual income tax will be the cheaper choice for a household that spends heavily on taxable goods, or that a higher sales-tax figure necessarily makes it more expensive overall. The effect depends on actual taxable spending and how the other tax lines compare.
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To estimate this line more carefully, begin with the annual spending you expect in categories that may be taxable, then identify applicable local rates and exemptions. Avoid multiplying your entire household budget by a headline sales-tax rate: not every expense is a taxable purchase, and local rules can matter. A source’s combined average is a context point, not a substitute for the town-level rate and your spending pattern.
Two households in the same state can therefore experience different sales-tax effects. One may spend a larger share of its budget on taxable purchases, while another’s budget may include fewer such purchases. The state average cannot tell you which household’s bill is larger without those details. Keep the estimate tied to your likely spending rather than treating a published rate as an individual tax burden.
How do I make an apples-to-apples comparison?
Build the same household profile for every state under consideration, then estimate annual state and local income, property, and sales taxes separately. Keep the tax year, location, income assumptions, and treatment of relief consistent. A useful result is a transparent estimate with assumptions—not a single number stripped of context.
- Set the household facts. Record filing status, ages, and expected annual income by source: Social Security, each pension, traditional IRA or 401(k) withdrawals, Roth distributions, interest and dividends, capital gains, and wages.
- Choose the housing scenario. Note whether you will rent or own, the home value if applicable, and the county or municipality. Identify property-tax relief that may apply, but verify eligibility before including it.
- Estimate annual spending. Use the same spending plan in each location. Identify the purchases likely to be taxable and check relevant local rates and exemptions instead of applying a statewide average indiscriminately.
- Apply each state’s rules to each income source. Do not use one broad retirement-income assumption. Record whether each source is taxable, exempt, or subject to a specific qualification, and confirm the rule for the tax year in question.
- Show the three annual tax lines separately. Write down estimated state and local income taxes, property taxes, and sales taxes. Label estimates, note whether local taxes are included, and explain any relief assumed.
- Keep one-time or estate issues separate. Include them only if they matter to your decision, and label them separately rather than blending them into annual tax cost.
- Test assumptions that could change the outcome. Recalculate with a different home location, taxable spending level, or income mix if those could reasonably vary. A close result may turn on a detail that a state-level label hides.
A comparison worksheet can be as simple as this:
| Annual item | State A estimate | State B estimate | What to verify |
|---|---|---|---|
| State and local income tax | Household-specific estimate | Household-specific estimate | Treatment of each income source; relevant tax year |
| Property tax | Bill for the likely home and locality | Bill for the likely home and locality | Local levies and verified relief eligibility |
| Sales tax | Estimate based on taxable spending | Estimate based on taxable spending | Local rates, exemptions, and spending mix |
| Annual total for these taxes | Sum of the three lines | Sum of the three lines | Same assumptions and coverage in both columns |
Use the worksheet as a repeatable method, not a contest between headline rates. For each state, write down the assumptions behind every estimate: the tax year, the locality, the home or rent scenario, which income sources were included, and whether you counted a relief program. That makes it easier to spot when one side includes local taxes and the other does not, or when an estimate assumes a discount that has not been confirmed.
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A comparison should also be clear about what it leaves out. The worksheet’s annual total covers the three listed tax categories; it is not a complete cost-of-living budget and does not automatically include one-time moving or estate considerations. Add those separately if they matter to your decision, with their own labels and time frame, rather than presenting them as annual taxes.
This is a framework, not a tax quote. The sources cited here do not supply one household-level calculator result that answers the question for every retiree. If a move depends on a narrow difference, confirm the current rules and your assumptions with state and local tax authorities or a qualified tax professional.
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Why do published rankings disagree?
Rankings measure different things, so two credible sources can answer different questions without contradicting each other. Before relying on a list, check its population, tax measure, data year, and treatment of local taxes.
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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Kiplinger’s 2026 list identifies states that do not tax retirement benefits, then selects the ten with the lowest median property-tax bills among those states. Its method is not a complete estimate of each reader’s total cost: it focuses on a defined group and a property-tax measure. Kiplinger also advises considering sales tax, cost of living, crime, and political climate.
The Pennsylvania Independent Fiscal Office takes a different approach in its 2025 report: it compares tax revenues with adjusted personal income. It reports Pennsylvania state and local taxes at 11.70% of that measure. This is a statewide effective-tax measure, not a retiree tax rate. The report draws on state data for fiscal year 2022–23, local data for fiscal year 2021–22, and calendar-year 2022 personal income. It also says the measure does not account for exported taxes or business taxes shifted to consumers and shareholders.
Those dates and definitions matter. The IFO’s percentage cannot be read as the share of a retiree’s income that will go to taxes, and Kiplinger’s median-property-tax approach is not a complete state-by-state retirement budget. A ranking can help you decide which states to investigate; it cannot replace applying current rules to your own household and locality.
Likewise, AARP’s reported averages and effective rates are useful comparisons within the terms of its guide, but they are not necessarily based on the same definitions or data years as another list. Do not combine figures from separate sources into one league table unless their underlying measures are comparable. A number labeled “average” or “effective” can describe a statewide population or a particular calculation; it does not automatically predict your household’s bill.
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When you read a ranking, ask what it actually ranks: a defined set of states, a median bill, a statewide ratio, or a specific income-tax feature. Then decide whether that measure matches your own question. A ranking may be a helpful shortlist, while the final comparison still depends on your income, home, location, and spending.
What should I verify before deciding?
Rules and local bills can change, so verify the specific year you are planning for rather than relying on an older article or a general state label. The Tax Foundation’s 2026 tables, for example, note that New Hampshire eliminated its interest-and-dividend income tax effective January 1, 2025, and that Washington taxes capital gains for high earners.
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- Confirm the state’s current treatment of each source of your income.
- Check the tax year and any qualifying conditions, thresholds, or exemptions that apply to you.
- Ask the county or municipality for the likely property-tax bill and check eligibility for relief.
- Use the likely local sales-tax rate and verify which purchases are taxable or exempt.
- Keep annual taxes distinct from moving costs, housing prices, insurance, utilities, and other non-tax expenses when the question is specifically which tax bill is lower.
Tax is only one part of choosing where to retire. If two locations have similar estimated taxes, broader costs and personal priorities may matter more than the difference in a statewide rate. Keep those factors visible in the decision, but do not label them taxes or fold them into a tax ranking without saying so.
For a final check, make sure both estimates use the same comparison year and cover the same categories. Confirm that the local property and sales-tax assumptions match the places you are actually considering, and that income exemptions or property-tax relief are ones you can claim. If any of those details is uncertain, mark it as an assumption and test a second scenario instead of treating the estimate as settled.
Frequently Asked Questions
Does Washington have no tax on investment income?
No broad individual income tax does not mean that every type of investment income is untaxed. Washington has a capital-gains tax for qualifying high earners; whether it affects you depends on the applicable rules and your circumstances.
What does Pennsylvania’s 11.70% tax figure mean for a retiree?
It is the Independent Fiscal Office’s 2025 report-year ratio of state and local tax revenues to adjusted personal income, not a tax rate applied to an individual retiree. Its inputs include data from different years, so it should not be treated as a personal estimate.
Did New Hampshire eliminate every tax on investment income in 2025?
The Tax Foundation’s 2026 tables say New Hampshire’s tax on interest and dividend income ended effective January 1, 2025. That specific change does not establish that every other tax or cost in the state disappeared.
Can I use a state’s average property-tax rate to estimate my bill?
Use an average only as a rough comparison point. The actual bill depends on the home and locality, and possible relief based on age, income, disability, veteran status, or homestead status should be verified before it is included.
Does a no-income-tax state mean I will pay no state or local taxes?
No. State and local governments can collect property, sales, excise, and other taxes. Compare the taxes that apply to your household rather than relying on the income-tax label.
The Bottom Line
Neither a no-income-tax state nor a low-income-tax state is automatically cheaper for retirees. Compare your own income sources, likely home and locality, relief eligibility, and taxable spending using the same tax year in each place. Keep income, property, and sales taxes as separate annual estimates, then consider broader living costs separately.
