5. Nevada
With some of the lowest property taxes in the country, no state income tax, and no inheritance or estate taxes, Nevada is a state that plenty of people love to retire to.
On the downside, it does have some of the highest state sales tax rates, although groceries and prescriptions are exempt. On balance, there's a lot for retirees to like from a tax perspective about Nevada.
6. New Hampshire
The Granite State lets people keep more of their hard-earned money, with no state tax on regular income and no tax on Social Security or pensions.
However, New Hampshire does tax interest and dividend income that exceeds $2,400 per person, though even that tax is being phased out, dropping from 4% in 2023 to 3% in 2024 before being repealed in 2025. There is also no state sales tax nor estate or inheritance tax.
The downside: New Hampshire has some of the highest median property taxes and property tax rates in the U.S. There's no such thing as a free ride, after all.
7. South Dakota
The Mount Rushmore State is one of a handful of states with no income tax, a benefit for everyone but especially for retirees. It also has no inheritance or estate tax and a relatively low combined average state and local sales tax rate of 6.4%.
Relatively low property values mean a lower median property tax bill, but its effective property tax rate of 1.09% is on the higher end, and thus a consideration if you're likely to own a high-value property.
8. Tennessee
One of the most tax-friendly states, even from this list, the Volunteer State has no state income tax, no estate or inheritance tax, and one of the lowest median property tax bills and property tax rates in the country.
You may end up paying more on sales tax though. Tennessee charges a 7% state sales tax, while local sales tax can be another 2.75%. The average Tennessean pays 9.56% in sales tax, the second-highest rate behind only Louisiana. This is notable depending on your spending and consumption levels.
9. Texas
The Lone Star State is another that's becoming more tax-friendly for retirees. It has no income tax, along with no estate or inheritance tax.
A current downside that might improve is the higher local property tax: An amendment to the Texas Constitution went before voters in November 2023 that should significantly reduce property taxes for homeowners, though potentially at the expense of businesses and renters, since commercial properties won't qualify. This could mean rents for retirees could rise in coming years, an important consideration when you factor in where you plan to live.
It's also worth noting that despite being one of the best states for individual income tax and an improving environment for homeowners, Texas's combined state and local tax rate of 8.2% is on the higher end.
10. Wyoming
While it's 10th on our alphabetical list, Wyoming is one of the -- if not the -- most tax-appealing states for retirees to consider. Not only does it lack state income tax on any source of income, but it also has no estate or inheritance tax. The Equality State also has one of the lowest effective property tax rates in the U.S. and a very appealing 4% state sales tax. The average 5.44% combined sales tax rate makes Wyoming one of the most tax-friendly states for retirement.
