The best states to retire in — for taxes

Ask most people where they want to retire and they'll describe a feeling: warmer winters, closer to the grandkids, a slower pace near the water. Taxes are often an afterthought.

Once you stop working and start drawing on your savings, the state you live in affects how much of that money you keep. The same $60,000 pulled from a traditional IRA can be fully taxed in one state and completely untouched across the border. A paid-off home and a lifetime of disciplined saving can sit comfortably under the federal estate exemption yet still leave your heirs a state estate-tax bill. The state you retire in may have a real impact on your plan.

State retirement taxes come down to four levers. A friendly headline on one can hide an unfriendly surprise on another, which is why we look at them together rather than one at a time.

1. 01
   Income tax on withdrawals

   How the state taxes money you take from traditional IRAs, 401(k)s, and pensions — ordinary income in most states, but fully exempt in a handful.

2. 02
   Social Security

   Only eight states still tax benefits in 2026, and most of those shield lower- and middle-income retirees with income limits.

3. 03
   Top income tax rate

   The ceiling on state income tax — from zero in nine states to 13.3% in California — and whether it's a flat rate or graduated brackets.

4. 04
   Estate & inheritance tax

   What the state takes when wealth passes to the next generation. Twelve states plus D.C. levy an estate tax; five levy an inheritance tax — often far below the federal $15M exemption.

Those four are the levers that decide the tax on what you draw and what you leave behind. But two more taxes hit every retiree, every year, no matter where the income comes from: property tax on the home you live in, and sales tax on what you spend. They're the quiet reason a "no income tax" state isn't automatically a bargain — Texas and New Hampshire charge no income tax but sit among the highest property-tax states in the country. So the table below shows all six, and lets you read it two ways: a retirement-tax grade focused on income, Social Security, and estate taxes, or an overall tax-burden view that folds in property and sales tax too. A homeowner and a renter can each find their own answer.

How the two grades are built

Both grades are Pine Harbor constructs, not official ratings. Each turns the underlying taxes into a single 0–100 score (higher is friendlier) so states rank consistently, and both use the same A–F scale. They differ in what they count.

The retirement-tax grade answers a focused question: how hard does this state tax the money you draw in retirement and the wealth you pass on? It weighs income on withdrawals, Social Security, and estate/inheritance taxes — the levers most specific to retirees.

The overall tax burden grade widens the lens to the taxes everyone pays regardless of income source — folding in property tax on your home and sales tax on your spending. It's the more realistic picture for a homeowner, and it changes several stories: a no-income-tax state with steep property taxes, or an income-friendly state with a high estate tax, both slip once everything is counted.

If your estate is comfortably below a state's exemption, read the income, Social Security, property, and sales columns first and weigh the legacy columns lightly. If it isn't, those columns may matter more than the rate on your next withdrawal. Property tax is shown as the effective rate — actual taxes paid as a share of home value — because headline "mill rates" aren't comparable across states with different assessment rules. Sales tax is the combined state and average local rate; your county may differ, and most states exempt or reduce tax on groceries and medicine.

What a tax table can't tell you

We stopped at taxes on purpose. Two of the biggest factors in where a retirement actually succeeds don't belong in a tax grade — and pretending they do would make the tool less honest, not more.

The first is healthcare. Access to good hospitals and specialists, Medicare Advantage plan availability, and the cost of supplemental coverage vary enormously — but they vary far more by county and city than by state, and the quality rankings that do exist disagree with one another. A statewide letter grade would flatten exactly the local detail that matters, so we'd rather you look at the specific communities you're considering than trust an average.

The second is cost of living. Housing, in particular, can dwarf every tax on this page: a lower tax bill in a high-housing-cost metro can still leave you worse off than a modestly-taxed state where your dollar stretches further. Groceries, utilities, insurance, and — for many retirees — the cost of being near family or the right airport all sit outside a tax comparison but often outrank it in the decision. The right way to weigh them is against your own budget and your own shortlist, not a national index.