Most Tax-Friendly States for Retirees in 2026: A–F Grade for All 50 States
State taxes can cost retirees $5,000–$20,000 more per year — or nothing at all. We graded every state on income tax, Social Security tax, property tax, and estate taxes so you know exactly where you stand.
Why State Taxes Can Be Your Biggest Retirement Expense
Federal income taxes are unavoidable — but state taxes are a choice. A retiree moving from California (13.3% top income tax rate) to Wyoming (0%) saves an estimated $10,000–$25,000+ per year in state income taxes alone, depending on their retirement income level. Over a 25-year retirement, that difference can exceed $400,000.
Taxes in retirement come from four main sources, and each state handles them differently: state income tax on 401(k) and IRA withdrawals, Social Security taxation, property tax, and estate and inheritance tax.
Key Finding 2026: Eight states have no income tax at all. Forty-one states (plus D.C.) do not tax Social Security benefits. West Virginia became the latest state to fully eliminate its Social Security tax in 2026. Nebraska, Missouri, and Kansas eliminated theirs in 2024.
Source: Kiplinger State Tax Guide 2026; SmartAsset 2026.
States With No Income Tax in 2026
These 8 states charge zero state income tax — meaning your 401(k) withdrawals, IRA distributions, pension income, and all other retirement income is completely state-tax-free:
*New Hampshire taxes interest and dividend income above certain thresholds, but not wages, pensions, Social Security, or retirement account withdrawals. Source: SmartAsset, Kiplinger 2026.
All 50 States — Tax Grade for Retirees (A–F)
We graded each state A through F based on four tax factors: income tax rate on retirement income, Social Security taxation, property tax burden, and estate/inheritance tax. Grade A = Best for retirees. Grade F = Avoid for taxes.
| State | Tax Grade | Income Tax (Max) | Taxes SS? | Avg. Prop. Tax | Estate Tax? | Notes |
|---|---|---|---|---|---|---|
| Wyoming | A+ | None | No | 0.53% | None | Best overall tax state |
| Florida | A+ | None | No | 0.83% | None | Best QOL + tax combo |
| South Dakota | A+ | None | No | 1.01% | None | Top 5 healthcare too |
| Alaska | A | None | No | 1.04% | None | + annual dividend check |
| Delaware | A | 6.6% | No | 0.57% | None | Low prop tax, SS exempt, no sales tax |
| Nevada | A | None | No | 0.57% | None | No income or estate tax |
| New Hampshire | A | None* | No | 1.89% | None | *No tax on wages/retirement; higher prop tax |
| Tennessee | A | None | No | 0.65% | None | No income tax since 2021 |
| Texas | A | None | No | 1.60% | None | High property tax offset |
| Alabama | B+ | 5.0% | No | 0.42% | None | Lowest prop tax; SS + pension exempt |
| Georgia | B+ | 5.49% | No | 0.83% | None | Retiree exclusion up to $65K |
| Mississippi | B+ | 4.0% | No | 0.67% | None | Exempts most retirement income |
| Arizona | B | 2.5% | No | 0.51% | None | Low flat rate; warm climate |
| Arkansas | B | 4.4% | No | 0.62% | None | Low COL, no SS tax |
| Idaho | B | 5.8% | No | 0.47% | None | Low prop tax; no SS tax |
| Indiana | B | 3.05% | Partial | 0.74% | None | Low flat rate overall |
| Louisiana | B | 4.25% | No | 0.53% | None | Low prop tax; no SS tax |
| Missouri | B | 4.8% | No (2024) | 0.97% | None | Eliminated SS tax in 2024 |
| Nebraska | B | 5.84% | No (2024) | 1.54% | None | Eliminated SS tax in 2024 |
| North Carolina | B | 4.5% | No | 0.78% | None | Flat 4.5%; no SS tax |
| North Dakota | B | 2.9% | No | 0.98% | None | Very low income tax rate |
| Oklahoma | B | 4.75% | No | 0.87% | None | Low COL; SS exempt |
| Pennsylvania | B | 3.07% | No | 1.36% | Inheritance | SS & pensions exempt; low flat rate |
| South Carolina | B | 6.4% | No | 0.52% | None | $15K deduction for retirement income |
| Virginia | B | 5.75% | No | 0.82% | None | $12K age deduction; SS exempt |
| Colorado | B− | 4.4% | Partial* | 0.51% | None | *65+ exempt up to $24K |
| Iowa | B− | 3.8% | No | 1.50% | Inheritance | High prop tax offset by low COL |
| Kentucky | B− | 4.0% | No | 0.83% | None | Flat rate; SS exempt |
| Michigan | B− | 4.05% | No* | 1.32% | None | *Phased out retirement income tax by 2026 |
| Washington | B− | None | No | 0.84% | Estate | No income tax but estate tax at $2.193M |
| West Virginia | B− | 5.12% | No (2026) | 0.56% | None | Just eliminated SS tax |
| Wisconsin | B− | 7.65% | No | 1.61% | None | SS exempt; higher income tax |
| Illinois | C+ | 4.95% | No | 1.95% | None | High prop tax kills the advantage |
| Kansas | C+ | 5.58% | No | 1.33% | None | Eliminated SS tax in 2024 |
| Ohio | C+ | 3.5% | No | 1.41% | None | Low rate but no SS protection |
| Maine | C | 7.15% | No | 1.09% | None | High income tax; SS exempt |
| Maryland | C | 5.75% | No | 1.07% | Inheritance | Inheritance tax + high income tax |
| Minnesota | C | 9.85% | Partial | 1.02% | Estate | High rate but #1 healthcare |
| Montana | C | 6.75% | Partial | 0.74% | None | Moderate income + SS partial tax |
| New Mexico | C | 5.9% | Partial | 0.55% | None | SS partial tax; low prop tax |
| Utah | C | 4.55% | Partial | 0.56% | None | Flat rate; SS partially taxed |
| Oregon | C− | 9.9% | No | 0.90% | Estate | High income tax offsets no SS tax |
| Connecticut | D | 6.99% | Partial | 1.63% | Estate | High income + estate tax |
| Massachusetts | D | 5.0% | No | 1.12% | Estate | Estate tax starts at $2M |
| New Jersey | D | 10.75% | No | 2.23% | Inheritance | Highest prop tax in US |
| Rhode Island | D | 5.99% | Partial | 1.43% | Estate | SS tax + estate tax |
| Vermont | D | 8.75% | Partial | 1.73% | Estate | High on all fronts |
| California | F | 13.3% | No | 0.71% | None | Highest income tax in US |
| Hawaii | F | 11.0% | No | 0.32% | Estate | Lowest prop tax can't offset 11% income tax |
| New York | F | 10.9% | No | 1.54% | Estate | High income + estate tax |
Source: Kiplinger State Tax Guide 2026; SmartAsset 2026; Tax Foundation 2026. Property tax rates: average effective rates from Tax Foundation 2025. SS taxation thresholds and income tax rates reflect 2026 law.
Frequently Asked Questions
Sources
- Kiplinger — State Tax Guide 2026
- SmartAsset — State Tax Comparison for Retirees 2026
- Tax Foundation — State Individual Income Tax Rates 2026
- Tax Foundation — Property Taxes by State 2025
- Social Security Administration — State Taxation of Benefits 2026
- Plootus Research — State Retirement Tax Analysis 2026
- West Virginia Legislature — SB 474 (SS Tax Elimination, 2026)
- Nebraska, Missouri, Kansas — SS Tax Repeal Legislation, 2024
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