When planning your retirement, you might also be considering where you’re going to live. Whether it’s the sunny South or living in the North, where the seasons change, a lot goes into choosing where you will spend the next chapter of your life.
One of those considerations when choosing a location is financial. Taxes are a major factor when deciding. How, then, do you choose which state is the most economical for you?
Tax-Friendly and Affordable States
On the surface, looking for states with no income tax or that don’t tax Social Security may seem like the true barometer. But there are other factors.For example, California doesn’t tax Social Security, but, according to the Tax Foundation, it has the highest state-level sales tax, 7.25 percent, in the country. According to the Bureau of Economic Analysis (BEA), California has a $53,082 per-capita personal consumption expenditure. Your tax savings may be a wash or even a loss.
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Alaska doesn’t have an income tax, but according to the BEA, the per-capita personal consumption expenditure is $54,331. Your retirement funds may not go very far.
All factors should be analyzed before choosing a new state. Below are some tax-friendly states that are affordable.
Wyoming Is Tax-Friendly
Wyoming is one of the most amenable when it comes to retiree taxes. It has no income tax. That means no state taxes on your Social Security, pension, or retirement account withdrawals. Your heirs will appreciate the fact that, according to the Tax Foundation, Wyoming doesn’t levy an estate or inheritance tax.According to the BEA, Wyoming’s per capita personal consumption expenditure is $47,832.
Mississippi: Birthplace of the Blues—and Affordable
Mississippi is a viable option for budget-conscious retirees. According to Smartasset, Mississippi doesn’t tax Social Security. As an added benefit to your retirement funds, the state doesn’t tax withdrawals from retirement accounts or public and private pensions. In case you’re considering working part-time, according to the Tax Foundation, Mississippi has a flat 4.7 percent individual income tax rate.
Mississippi also has the lowest per-capita personal consumption expenditure in the nation at $36,445, according to the BEA.
Georgia Retirement Tax-Friendliness
Georgia has a low cost of living and tax-friendly benefits for retirees. The state doesn’t tax Social Security. Withdrawals from pensions and retirement accounts are partially taxed. But according to the AARP, as of 2024, Georgia has a flat tax rate of 5.39 percent.According to the Georgia Department of Revenue, those seniors over 62 who are permanently disabled may qualify for a retirement-income exclusion that’s equal to $65,000. There are also several tax-relief programs for retirees. These include homestead exemptions and other exemptions for those 65 and older.
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Georgia’s per-capita personal consumption expenditure is $43,488, according to the BEA.
Nevada Good to Retirees
Nevada is very tax-friendly to retirees. The state doesn’t tax Social Security. Nevada also doesn’t levy a tax on withdrawals from retirement accounts. And don’t worry if you’re receiving a private or public pension: You also won’t be taxed.As an added bonus for retirees, according to the Tax Foundation, Nevada doesn’t have an estate or inheritance tax.
According to the BEA, Nevada’s per-capita personal consumption expenditure is $44,831.
Texas Welcomes Retirees
The Lone Star State seems to want to attract retirees. Texas doesn’t tax Social Security. Retirees’ retirement account withdrawals are also tax-free. Finally, public and private pension funds are not taxed. This is because Texas doesn’t have an income tax.Texas also doesn’t impose state-level estate or inheritance taxes. This could influence a retiree’s estate-planning process.
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Texas’s per-capita personal consumption expenditure is $45,114, according to the BEA.
Oklahoma Tax-Friendly for Retirees
Oklahoma doesn’t tax Social Security. It also doesn’t tax military retirement income. But partially taxed are withdrawals from retirement accounts, public pensions funds, and private pension funds.According to the Oklahoma Tax Commission, those receiving Federal Employees Retirement System (FERS) benefits can exclude up to $10,000 from taxable income on their state income tax return, but will be taxed on the remaining amount. Oklahoma Retirement Income recipients can also exclude up to $10,000, but will be taxed on the remaining amount as well.
Retirement account withdrawals can also exclude $10,000 from their taxes. These accounts include such plans as a 401(k), 457(b), SEP (simplified employee pension), IRA (individual retirement account), etc.
According to the Tax Foundation, the individual state tax rate that will be applied to the remainder of the pension or retirement account is graduated, with rates ranging from .25 to 4.75 percent.
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The BEA has Oklahoma’s per-capita personal consumption expenditure as $38,650.
Florida Has High Consumption Expenditure
Florida is retiree-friendly when it comes to taxes. The state doesn’t have an income tax—therefore, Social Security isn’t taxed. Florida also doesn’t tax private or public pensions. Withdrawals from retirement accounts are also tax-free. But the state does have a high consumption expenditure.Florida’s per-capita personal consumption expenditure is $50,689, according to BEA.
The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
