Best States With No Income Tax to Retire In (2025 Guide)

If we’re being real, one of the biggest questions I get from friends and family as they approach retirement is: “Where should I move to save the most on taxes?” It’s not just about chasing sunshine or beaches—though those are nice perks. For many of us, it’s about stretching retirement savings as far as possible. And that’s where states with no income tax come in.

But here’s the thing: just because a state doesn’t tax your paycheck doesn’t mean it’s automatically the cheapest place to live. I learned this the hard way when I helped my parents research retirement spots a few years ago. We were laser-focused on “no income tax” until we realized that some of these states make up the difference with higher property or sales taxes.

So, if you’re thinking about retiring in a tax-friendly state, let’s break down the real story—not just the headlines.

The 9 States With No Income Tax in 2025

As of 2025, there are nine states that don’t tax your income:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

At first glance, that sounds like a dream. But before you pack your bags, let’s dig into what each state actually offers retirees—and what you might be trading off.

Alaska: The Unexpected Perks

Alaska is the only state that doesn’t have a state income tax or a statewide sales tax. That’s huge. But what really sets Alaska apart is the Permanent Fund Dividend. Every year, residents get a check from the state’s oil revenues. In 2024, it was $1,702. For retirees, that’s a nice little bonus.

But here’s where things get messy: Alaska’s cost of living is high, especially in Anchorage and Fairbanks. Groceries, utilities, and housing can be expensive. And while there’s no sales tax, some cities do charge local sales taxes.

On the plus side, Alaska doesn’t tax Social Security, pensions, or retirement account withdrawals. It also has no estate or inheritance tax. If you’re okay with cold winters and a bit of isolation, Alaska can be a great choice.

a one dollar bill and a button with a picture of george washington on it

Florida: The Classic Retirement Pick

Florida is the poster child for tax-friendly retirement. No income tax, no estate tax, no inheritance tax, and no long-term capital gains tax. Plus, the weather is warm, and there’s a huge retiree community.

But Florida’s property taxes can be high, especially in popular areas like Miami and Naples. The state does offer a homestead exemption, which can reduce your taxable value by up to $50,000. Sales tax is 6% statewide, but local taxes can push it higher.

One thing I didn’t realize until I visited: Florida’s cost of living has been rising fast. Housing prices have skyrocketed, and hurricane insurance isn’t cheap. But if you’re looking for a vibrant social scene and year-round sunshine, Florida is hard to beat.

Nevada: Low Taxes, High Heat

Nevada is another favorite for retirees. No income tax, no estate tax, and no inheritance tax. The state also doesn’t tax retirement income, including Social Security, pensions, and 401(k) withdrawals.

Nevada’s property taxes are among the lowest in the country, but sales tax is 6.85%, which is higher than average. The cost of living is moderate, especially outside of Las Vegas.

One downside: Nevada’s summers are brutally hot, and water restrictions are common. But if you don’t mind the heat and want a low-tax lifestyle, Nevada is a solid pick.

New Hampshire: The Quiet Contender

New Hampshire is unique. It doesn’t tax wages or retirement income, and it’s one of only five states with no sales tax. But until 2025, it did tax interest and dividend income. That tax has now been repealed, making New Hampshire fully income tax-free.

The catch? Property taxes are high, especially for mobile homes and condos. The cost of living is also on the higher side, and winters can be harsh.

If you’re looking for a quieter, more rural retirement, New Hampshire offers beautiful scenery and a slower pace. But be prepared for higher property taxes and cold winters.

South Dakota: The Hidden Gem

South Dakota doesn’t tax income, and it’s one of the most affordable states to live in. Property taxes are low, and the cost of living is reasonable. The state also doesn’t tax Social Security or retirement income.

The downside? South Dakota is rural, and the weather can be extreme. Winters are cold, and summers can be hot. But if you’re okay with a slower pace and don’t mind the weather, South Dakota is a great value.

Tennessee: The Music City Magnet

Tennessee doesn’t tax wages, but it did tax interest and dividend income. That tax has been phased out, making Tennessee fully income tax-free as of 2025.

Tennessee’s cost of living is moderate, especially outside of Nashville. Property taxes are low, but sales tax is high—up to 9.75% in some areas.

Nashville is a popular retirement spot, but it’s getting crowded and expensive. If you want a quieter life, consider smaller towns like Franklin or Chattanooga.

Texas: The Big State, Big Choices

Texas is a classic choice for retirees. No income tax, no estate tax, and no inheritance tax. The state also doesn’t tax retirement income.

Texas’s cost of living varies widely. Cities like Austin and Dallas are expensive, but smaller towns are more affordable. Property taxes are high, but there are homestead exemptions.

One thing to watch: Texas has no state income tax, but it does have a high sales tax—up to 8.25%. And if you’re in a major city, housing costs can be steep.

Washington: The Tech Hub Trade-Off

Washington doesn’t tax most earned income, but it does have a long-term capital gains tax. As of 2025, the rate is 7% on gains up to $1 million and 9.9% on gains above that.

Washington’s cost of living is high, especially in Seattle. Property taxes are moderate, and sales tax is 6.5% statewide.

If you’re not selling investments, Washington can be a good choice. But if you’re planning to cash out stocks or real estate, the capital gains tax could be a surprise.

Wyoming: The Wide-Open Spaces

Wyoming doesn’t tax income, retirement income, or estate. The state also has some of the lowest property taxes in the country.

Wyoming’s cost of living is low, and the scenery is stunning. But it’s rural, and the weather can be extreme. Winters are long and cold.

If you want space, low taxes, and a quiet life, Wyoming is hard to beat.

What I’d Do Differently

If I were helping my parents again, I’d look beyond just “no income tax.” I’d compare the total tax burden—property, sales, and local taxes. I’d also consider the cost of living, healthcare access, and climate.

One thing I wish I’d known: some states with no income tax have higher property or sales taxes to make up the difference. And just because a state is tax-friendly doesn’t mean it’s affordable.

Mistakes to Avoid

Assuming no income tax means lower overall taxes. Some states make up the difference with higher property or sales taxes.
Ignoring the cost of living. A low tax bill won’t help if housing and groceries are expensive.
Overlooking healthcare access. Retirees need good medical care, especially in rural areas.
Not checking local taxes. Some cities or counties have their own sales or property taxes.

Comparison Table: No Income Tax States for Retirees

State	Income Tax	Property Tax	Sales Tax	Retirement Income Taxed?	Notable Perks
Alaska	No	Moderate	No	No	Permanent Fund Dividend
Florida	No	High	6-7%	No	Homestead exemption
Nevada	No	Low	6.85%	No	Low property tax
New Hampshire	No	High	No	No	No sales tax
South Dakota	No	Low	4.5%	No	Affordable cost of living
Tennessee	No	Low	Up to 9.75%	No	No estate tax
Texas	No	High	Up to 8.25%	No	No estate tax
Washington	No*	Moderate	6.5%	No	Capital gains tax on investments
Wyoming	No	Low	6%	No	Low property tax

*Washington taxes long-term capital gains.

The Unconventional Insight

Here’s something most people don’t talk about: the social scene. Retiring in a tax-friendly state is great, but if you’re lonely or isolated, it’s not worth it. I’ve seen friends move to low-tax states only to feel cut off from family and friends.

So, while taxes matter, don’t forget about community, healthcare, and quality of life. Sometimes, the best retirement spot isn’t the one with the lowest tax bill—it’s the one where you feel at home.

Final Thoughts

Retiring in a state with no income tax can save you thousands of dollars. But it’s not a magic bullet. Every state has trade-offs, and the best choice depends on your priorities.

If you want sunshine and a vibrant social scene, Florida or Nevada might be perfect. If you prefer quiet and low costs, South Dakota or Wyoming could be your spot. And if you’re okay with cold winters and a bit of isolation, Alaska offers unique perks.

Whatever you choose, do your homework. Look at the total tax burden, cost of living, and quality of life. And don’t forget to visit before you commit.

If you’re thinking about retiring in a tax-friendly state, I’d love to hear your thoughts. Have you visited any of these places? What surprised you? Share your story in the comments below.