Most people understand that paying taxes is just part of living in a civil society. Still, forking over this money is a drag. Never even mind the fact that it's money you could personally put to better use.

Well, here's a little good news: Although you'll never fully escape taxation of one type or another, a handful of U.S. states don't tax at least some forms of retirement income. Here's a closer look at which states offer retirees a break from state-level taxation even if you're still fully subject to federal taxes in these locales.

The tax-friendliest states for retirees

Let's begin with the best news -- you'll probably not owe any state taxes on your monthly Social Security payments. A total of 41 states, as well as Washington D.C., simply don't tax this income. Here's the full list:

  1. Alabama
  2. Alaska
  3. Arizona
  4. Arkansas
  5. California
  6. Delaware
  7. Florida
  8. Georgia
  9. Hawaii
  10. Idaho
  11. Illinois
  12. Indiana
  13. Iowa
  14. Kansas
  15. Kentucky
  16. Louisiana
  17. Maine
  18. Maryland
  19. Massachusetts
  20. Michigan
  21. Mississippi
  22. Missouri
  23. Nebraska
  24. Nevada
  25. New Hampshire
  26. New Jersey
  27. New York
  28. North Carolina
  29. North Dakota
  30. Ohio
  31. Oklahoma
  32. Oregon
  33. Pennsylvania
  34. South Carolina
  35. South Dakota
  36. Tennessee
  37. Texas
  38. Virginia
  39. Washington
  40. Wisconsin
  41. Washington, D.C.
  42. Wyoming

To be clear, living in one of the other nine states doesn't necessarily mean you'll owe state-based income taxes on your Social Security benefits. It just means you might be subject to taxation. Although it's unlikely, it's possible that your retirement earnings will remain below each or all of these states' minimum income thresholds for taxation.

But Social Security isn't your only source of income in retirement? You should also know that there are nine states that don't impose taxes on any retirement income, although not exactly as a favor to older residents -- they simply don't charge state-level income taxes on any income earned there. Tourism or geography-specific industry typically generates enough revenue for these states' governments:

  1. Alaska
  2. Florida
  3. Nevada
  4. New Hampshire
  5. South Dakota
  6. Tennessee
  7. Texas
  8. Washington
  9. Wyoming

Then there's a small handful of states that do tax ordinary work-based income, but don't tax pension income, distributions from individual retirement accounts, and the like:

  1. Illinois
  2. Iowa
  3. Mississippi
  4. Pennsylvania

Just be aware that reasonable limitations still apply in all four of these states. In Mississippi and Pennsylvania, for example, retirees as well as their retirement plans will still need to meet certain qualification requirements for this income to be tax-free. And in Iowa, you'll need to be at least 55 years of age to be eligible for tax-free income from IRAs and pension plans. By and large, though, most retirees in these four states won't be paying any income taxes on their retirement income.

Two people looking at paperwork.

Image source: Getty Images.

Now, what if you've got something a bit out of the ordinary, like a military, railroad, or state-employee pension? The taxation rules vary quite a bit with this income, and can change rather regularly too. You'll want to check with a specific state for its particular income-tax rules on retirement income from these sources.

Strategic relocation?

Again, don't misunderstand. The retirement income in question is only untaxed in these states at the state level. You'll still be subject to federal taxation, which makes up the bulk of any given year's income tax bill.

The so-called "big, beautiful bill?" It helps... a little. The Social Security Administration reports that the recent passage of the legislation means 90% of the program's retired beneficiaries will now no longer owe any federal income taxes on their benefits. The other 10% who are unusually high earners still might be subject to some taxation of this income. That's not a lot more than were already not paying any taxes on this income, though, mostly due to the relatively modest size of the payments they're collecting. Meanwhile, the bulk of everyone's other retirement income remains fully subject to at least some degree of federal taxation.

Most estimates put the annual savings for the average middle-class household somewhere between a few hundred and a couple thousand bucks, including for a healthy number of retirees.

Whatever the case, with the cost of living changing at different paces -- and even moving in different directions -- in different parts of the U.S. right now, it wouldn't be bad to at least consider making a move that might have been on your radar anyway. Although there are certainly more important things in life than reducing your total tax bill, keeping a few extra hundred or even a few thousand bucks in your pocket every year might in some cases be enough to merit a relocation.

Sit down with a pencil and piece of paper to flesh out your comparative costs and savings before uprooting your life for less expensive pastures, factoring in any changes to major budget items like housing or transportation.