If you've started mapping out where to live in retirement, you've probably run into a tempting headline: "These 9 states have no income tax!" It sounds like an easy win. Move to Florida, keep more of your money, done.
The reality is more interesting — and more useful. State taxes in retirement aren't a single yes-or-no question. A state can have an income tax but exempt your Social Security entirely. Another can have no income tax but make up the difference with high property and sales taxes. And the "best" state for one retiree can be a poor choice for another, depending on whether your income comes from a pension, a 401(k), a brokerage account, or all three.
This guide walks through what actually gets taxed, which states treat retirees most generously, and how to figure out what the move would mean for your numbers — not a hypothetical retiree's.
The nine states with no income tax
Let's start with the simplest category. As of 2026, these states levy no tax on earned or retirement income:
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
A note on two of them. New Hampshire historically taxed interest and dividend income, but that tax has been fully phased out — so it now belongs on the no-income-tax list. Washington has no income tax on wages or retirement income, but it does levy a capital gains tax on large investment gains, which can matter if you're selling appreciated stock in retirement.
For most retirees, living in one of these nine states means your Social Security, pension, IRA, and 401(k) withdrawals all arrive untaxed at the state level. That's real money. On $80,000 of annual retirement income, skipping a 5% state tax saves $4,000 a year — roughly $100,000 over a 25-year retirement, before you even count investment growth on the money you didn't hand over.
But "no income tax" doesn't mean "no taxes." Which brings us to the catch.
No income tax doesn't mean low taxes
States need revenue. When they don't collect it through income tax, they collect it elsewhere — usually property and sales taxes.
Texas is the classic example. No income tax, but some of the highest property taxes in the country, often well above 1.6% of a home's value annually. On a $500,000 home, that's $8,000+ a year, every year, whether or not you're "earning" anything. For a retiree on a fixed income who owns a paid-off house, a high property tax bill can erase much of the income-tax savings.
Tennessee and Florida lean more on sales tax. Florida's combined state-and-local sales tax often lands near 7.5%, and Tennessee's is among the highest in the nation. If you spend a lot in retirement, that adds up.
The honest way to compare states is to look at total tax burden — income, property, and sales combined — as a share of what a retiree actually spends. When you do that, the rankings shuffle. A state with a modest income tax but low property and sales taxes can leave a retiree better off than a "no income tax" state with punishing property bills.
States that tax income but go easy on retirees
Here's where the simple headline really breaks down. Plenty of states with an income tax carve out generous exemptions for retirement income — sometimes enough that a retiree pays little or nothing.
Social Security is mostly safe
The big one: the large majority of states do not tax Social Security benefits at all. Only a small handful still tax them in any form, and several of those have been phasing the tax out or raising the income thresholds at which it applies. If Social Security is a major piece of your retirement income, the state-tax question on that slice is usually a non-issue.
Pension and 401(k) exemptions vary widely
This is where states diverge most. A few examples of the range:
Illinois and Pennsylvania famously exempt most retirement income — pensions, 401(k), and IRA withdrawals — from state tax, even though both have an income tax on wages. For a retiree, that effectively makes them low-tax states.
Other states offer a fixed retirement-income exclusion — say, the first $20,000 to $65,000 of pension or IRA withdrawals per person, sometimes only above a certain age. The exact amount, the age trigger, and which income types qualify differ in every state, and they change as legislatures revise them.
A smaller group taxes retirement withdrawals largely the same as wages, with only modest breaks. These are the states where a high-income retiree drawing heavily from a traditional 401(k) feels the bite most.
The takeaway: a state's headline income-tax rate tells you almost nothing about what you'll pay. The structure of the exemptions — and how your specific income sources line up against them — is what matters.
Why the source of your income changes the answer
Two retirees can live in the same state, spend the same amount, and owe wildly different state taxes. The difference is where their money comes from.
Consider three retirees, each spending $90,000 a year:
The first draws almost entirely from a traditional 401(k). Every dollar is ordinary income, fully exposed to whatever the state taxes. In a state with weak retirement exemptions, this person pays the most.
The second draws from a mix of Social Security, a Roth IRA, and taxable brokerage savings. The Social Security is largely exempt, the Roth withdrawals are tax-free everywhere, and the brokerage withdrawals are mostly return of principal plus long-term capital gains — often taxed gently or not at all by the state. This person can owe almost nothing in state income tax even in a state with a "normal" rate.
The third is somewhere in between, with a pension that a given state may fully exempt, partially exempt, or fully tax.
This is why blanket "best states for retirees" lists are so unreliable. They assume an average retiree who doesn't exist. The right state for you depends on your actual withdrawal mix — and that's something you can model before you ever list your house.
How to figure out your real number
If you're seriously weighing a move, here's a practical way to think it through.
Start by listing your expected retirement income by source: Social Security, any pension, traditional 401(k)/IRA withdrawals, Roth withdrawals, and taxable brokerage income. Roughly estimate the annual amount of each.
Then, for each state you're considering, find out three things: does it tax Social Security, does it tax pension/401(k)/IRA withdrawals (and is there an exclusion amount or age trigger), and what are the property and sales taxes you'd actually face given your home and spending.
Run the comparison on total burden, not just income tax. And remember that the picture shifts over your retirement — required minimum distributions from traditional accounts kick in starting in your 70s and can push your taxable income up sharply, which can make a state's retirement-income treatment matter more later than it does at 62.
That last point is the one most quick comparisons miss. The state that looks great in your first low-income years of retirement might look very different once RMDs and full Social Security are flowing.
Modeling it instead of guessing
Doing this by hand across a few states, with the right exemptions and a 25- or 30-year horizon, is genuinely tedious — which is why most people just trust a ranking and hope for the best.
This is the kind of thing Tally was built to take off your plate. It models all 50 states' income taxes, plus federal brackets, FICA, capital gains, and the mechanics of Social Security and RMDs, across a full lifetime forecast. You can build a what-if scenario for "retire in our current state" versus "move to Florida" and see the year-by-year difference in taxes and ending net worth — using your real accounts and your real withdrawal mix, not a stand-in.
You can connect your accounts, sketch out your retirement income plan, and compare states side by side during the 14-day free trial — no credit card required. Whether you end up moving or staying, you'll at least know what the decision is actually worth, in dollars, over the rest of your life.
The headline number — "9 states have no income tax" — is a fine place to start a conversation. It's a poor place to end one.