Best States to Retire with Low Taxes in 2025: Where Your Money Goes Further

If you're nearing retirement and wondering where to stretch your dollar, you're not alone. One of the smartest financial moves you can make is retiring in a tax-friendly state. With healthcare, housing, and living costs on the rise, choosing a state with low taxes for retirees can significantly impact your quality of life. But the trick is finding low tax retirement states that also offer the lifestyle you want.

In this guide, we'll break down the best places to retire on a budget, focusing on states with no tax on retirement income, low property taxes, and affordable living. Plus, we’ll throw in some overlooked gems most people miss.

Why Tax-Friendly States Matter for Retirees

Let’s be honest: every dollar counts in retirement. While your 9-to-5 days may be over, the IRS still wants a slice of your pension, Social Security, or 401(k) — unless you live in a state that says “not here.”

Here’s why retirees should pay attention to state taxes:

• Social Security tax: Some states tax it, others don’t.

• Pension and retirement income tax: IRA and 401(k) withdrawals can be taxed.

• Sales tax and property tax: These vary widely and affect your day-to-day spending.

• Estate/inheritance tax: Could affect how much you leave behind.

So which states check all the boxes for retiree tax savings?

Top 7 States with Low Taxes for Retirees in 2025

1. Wyoming – The Hidden Gem for Financially Savvy Retirees

Wyoming often flies under the radar, but it’s a goldmine for retirees looking to keep more of their money.

• No state income tax — including on Social Security, pensions, and withdrawals

• Extremely low property and sales taxes

• Affordable housing and healthcare

• Beautiful national parks and wide-open space

Pro Tip: Communities like Cody and Sheridan are becoming popular retirement hubs.

2. Florida – Classic Choice for a Reason

Florida isn't just about beaches and sunshine — it’s a tax haven for seniors.

• No state income tax

• No tax on Social Security, pensions, or IRA distributions

• Senior exemptions reduce property taxes in many counties

Drawback: Cost of living has risen in metro areas, so look at smaller towns like Ocala or Port Charlotte for better value.

3. Tennessee – A Southern Charmer with Tax Perks

Tennessee recently eliminated all income tax, making it one of the best states for tax-free retirement income.

• No income tax on wages or retirement

• Low cost of living and real estate prices

• Music, food, and culture in cities like Nashville and Chattanooga

Heads up: Property taxes are moderate — lower than the national average but not the lowest.

4. South Dakota – For the Minimalist Retiree

South Dakota scores high for retirees who want to simplify life and maximize savings.

• No income tax — retirement income is tax-free

• Very low property and sales taxes

• Quiet towns with a strong sense of community

Note: Winters can be harsh, so it’s ideal for snowbirds or those who love four seasons.

5. Nevada – Sunshine, Entertainment, and No Income Tax

Nevada offers more than just the glitz of Las Vegas. It’s a top contender for retirees who want entertainment without tax penalties.

• No state income tax (so your pension and retirement accounts are safe)

• Tax breaks on property for seniors

• Lots of 55+ communities in Reno, Henderson, and Lake Tahoe area

Bonus: Dry desert climate is great for arthritis and allergies.

6. Delaware – East Coast Retiree Heaven

If you want to retire near the ocean without the high taxes of New Jersey or New York, Delaware is a sweet spot.

• No state or local sales tax

• No tax on Social Security income

• Property taxes among the lowest in the nation

• Retiree exclusion on pension income up to $12,500

Best Places to Look: Rehoboth Beach, Lewes, and Milford.

7. Mississippi – Most Overlooked State for Retirees on a Budget

Mississippi has one of the lowest overall costs of living in the country — and it's generous with retirees.

• No tax on any retirement income

• Extremely low housing costs

• Relaxed pace of life

Consider This: If you’re looking for a quiet, affordable lifestyle, Mississippi could surprise you.

Tips for Choosing the Right State to Retire In

Even a low tax state might not be right for everyone. Here’s what to factor in:

• Healthcare access: Proximity to quality hospitals matters as you age.

• Weather: Love snow or hate it? Choose accordingly.

• Cost of living: Taxes are just one piece of the puzzle.

• Family & community: Do you want to be near kids/grandkids?

• Hobbies & lifestyle: Make sure the state supports your interests (golf, fishing, culture, etc.).

Final Thoughts: Where to Retire with Low Taxes in 2025

If you’re looking to retire comfortably and keep more of your money, moving to a low-tax state could be a game-changer. While there’s no one-size-fits-all, the states on this list — from Florida to Wyoming — offer a blend of tax benefits, affordability, and livability.

And remember, it’s not just about taxes. It’s about finding a place that feels like home and gives you peace of mind in your golden years.