Retirement taxes
Tax-Friendly States for Retirees: Our 2026 Ranking
Tax-friendly states for retirees in 2026, ranked by how they treat Social Security, pensions and IRA income, not just whether they have an income tax.
Checked against primary sources from Social Security, Medicare and the IRS. How we check our numbers
"Tax-friendly" usually gets reduced to one question: does the state have an income tax? For retirees that's the wrong question. What matters is how a state treats the income you actually have — Social Security, pensions, IRA and 401(k) withdrawals — and what it charges you in other ways. We ranked all 50 states and DC on that basis, using the 2026 rules in our state retirement tax guide.
How we ranked the states
Every state lands in one of five tiers based on four questions: Is Social Security taxed? Are pensions taxed? Are IRA and 401(k) withdrawals taxed? How big are the retirement-income breaks, and how high is the top rate? Within each tier, states are listed alphabetically, because the order inside a tier depends on your own income mix.
| Tier | States | What it means |
|---|---|---|
| Tax-free retirement income | 9 | No broad income tax |
| Very friendly | 13 | Social Security exempt; pensions and IRA income fully or largely exempt |
| Friendly | 18 | Social Security exempt; partial breaks or low rates on other income |
| Mixed | 4 | Some Social Security taxed, or narrow breaks |
| Less friendly | 7 | Retirement income largely taxed like wages, often at higher rates |
The 2026 ranking
Here is every state and DC by tier, based on the 2026 tax year. A state's tier reflects the typical retiree with Social Security plus a pension or IRA withdrawals, so a very different income mix can change where it belongs for you.
Tax-free retirement income (no broad income tax): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Very friendly: Alabama, Colorado, Georgia, Hawaii, Illinois, Iowa, Kentucky, Maine, Michigan, Mississippi, New York, Pennsylvania, Wisconsin. Illinois, Iowa, Mississippi and Pennsylvania exempt Social Security, pensions and IRA withdrawals entirely.
Friendly: Arizona, Arkansas, Delaware, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Missouri, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Virginia, West Virginia.
Mixed: Connecticut, Idaho, Rhode Island, Utah.
Less friendly: California, District of Columbia, Minnesota, Montana, New Mexico, Oregon, Vermont.
Only nine states tax Social Security in 2026 — Colorado, Connecticut, Minnesota, Missouri, Montana, New Mexico, Rhode Island, Utah and Vermont — and most exempt it for typical retirees by age or income. Colorado, for example, exempts it fully from 65, and Missouri from 62. Each state page has the exact 2026 rule, such as Illinois or Florida.
Tax-Friendly States for Retirement: No Income Tax Is Not Everything
A state with no income tax isn't automatically the cheapest place to retire. States still need revenue, and the ones without an income tax often collect more through property taxes, sales taxes or both. For a retiree with a paid-off house and modest withdrawals, those can outweigh the income tax you'd save.
Three things to check alongside the income tax:
- Property tax. Rates vary widely between states and counties, and so do senior exemptions.
- Sales tax. Combined state and local rates can be high in some no-income-tax states, and it falls on spending you can't avoid.
- Special taxes. Washington, for example, has no wage tax but taxes large long-term capital gains — relevant if you plan to sell a business or a big stock position.
The flip side: in a very friendly income-tax state like Illinois or Pennsylvania, a retiree living on Social Security and IRA withdrawals may owe nothing in state income tax at all, without giving up anything else.
Tax-Friendly States for Seniors: Property Tax Breaks at 65
Many states cut property taxes for older homeowners, and for some retirees that's worth more than any income tax break. The details are set by state law and often by county, so check with your local assessor, but here are examples of how big they can be.
- Texas requires school districts to give homeowners 65 or older an additional $60,000 residence homestead exemption on top of the general one (Texas Comptroller).
- Florida offers homestead exemptions statewide and lets counties and cities add an extra exemption for lower-income seniors (Florida Department of Revenue).
- Pennsylvania pays property tax and rent rebates to lower-income residents 65 and older through its Property Tax/Rent Rebate Program (Pennsylvania Department of Revenue).
- South Carolina exempts part of a home's value for owners 65 and older — see our South Carolina page for the 2026 amount.
Most of these breaks are not automatic. You usually have to apply once with your county, and some programs have income limits that change every year.
What changed for 2026
Several states got friendlier this year, which is why a list from even two years ago can mislead you. The changes below come from our state pages, each linked to the state's own revenue department.
- West Virginia finished phasing out its tax on Social Security, so it is fully exempt for everyone in 2026, and rates were cut 5%.
- Georgia lowered its flat rate to 4.99% for 2026, from 5.19%, and raises its 65+ retirement exclusion to $70,000 from 2027.
- Ohio moved to a flat 2.75% for 2026, with the first $26,050 of nonbusiness income taxed at 0%.
- North Carolina cut its flat rate to 3.99% for 2026, from 4.25%, with further cuts already set in law.
- Indiana is at 2.95%, and Montana's top rate fell to 5.65%.
- New Hampshire no longer taxes interest and dividends at all, from 2025.
At the other end, California's top rate is 12.3% and DC's 10.75%, and neither gives a general break for pension or IRA income.
How to use the ranking
Start with your income mix, not the tier. If most of your income is Social Security, almost every state is friendly — only a handful tax it, and rarely for typical incomes.
If you have a large pension or will take big IRA withdrawals — which only your state of residence can tax once you've moved (4 U.S.C. §114) — the difference between a "very friendly" and a "less friendly" state can be thousands of dollars a year. Estimate your federal bill on the retirement tax calculator, then open the state pages you're considering to compare the state side.
Our take
Don't let the income tax alone choose your retirement home. For a typical retiree, the gap between a no-income-tax state and a very friendly income-tax state is small, and property taxes, insurance and the cost of living can easily flip it.
Use the tiers to narrow the list, then price your own income and your own house. And if Social Security is most of your income, see what's taxable federally on the taxable Social Security calculator — that bill follows you everywhere (IRS Publication 915).