Are states With No Income Tax Good or Bad for Retirees?

While adding up the different types of taxes in a potential retirement destination is important, tax exemptions and deductions should also be considered. Most states offer personal exemptions for taxpayers and their dependents.
While adding up the different types of taxes in a potential retirement destination is important, tax exemptions and deductions should also be considered. Most states offer personal exemptions for taxpayers and their dependents.

When looking for a place to retire, active adults sometimes assume that a state without state income taxes will be a more affordable place to live. However, this is not always true. There are many factors that contribute to an active adult’s total tax burden.

Although there are some places where you will not have to pay state taxes, those same states could have higher rates when it comes to other taxes such as property tax or sales tax. For example, Wyoming has no state income tax, but its property taxes are among the highest in the country.

Consider An Area’s Total Tax Burden

 Before deciding on a retirement destination, it is best to consider the area’s total tax burden as part of its complete cost of living. This will give you a better idea of how far your retirement savings will last in your new home. Depending on your situation, lower income taxes may be less important than you initially realize. After all, living in a state that has no income tax may not be as much help once you retire and have less income.

Property tax is often an important consideration for relocating retirees. While the state will set maximum limits and certain regulations when it comes to these taxes, the actual rates are generally determined at a local level. This means that different cities in the same state may have different real estate tax rates. Some states may also have property tax breaks for retirees over a certain age. In addition to basic real estate taxes, some states have personal property taxes. These are taxes on property that is not real estate, such as cars, boats, motor homes, trailers, livestock, and farm equipment.

Most states also have sales tax, which can have a large impact on your cost of living. Some of these states have a single rate, but many allow local city and county rates added to the base sales tax. Certain items may be exempt from sales tax, including food, clothing, and prescription drugs. However, other items, such as cigarettes, may carry an additional tax.

While adding up the different types of taxes in a potential retirement destination is important, tax exemptions and deductions should also be considered. Most states offer personal exemptions for taxpayers and their dependents. States may also allow specific deductions, such as those for healthcare expenses. A few states even allow taxpayers to deduct some or all of their federal income taxes.

Retiring in a location that has no state income tax may be an affordable option, but only if your total tax burden is not increased in other ways. Consider the whole picture when evaluating tax-friendly states and you will be prepared to make an informed decision.

Can you spot the $207,744 difference between these identical homes?

Financing is the difference!

Get the details in The 62+ Loan Homebuyers Guide.

55places Mortgage is a joint venture between Mutual of Omaha Mortgage and
Details here.

Share this post:

We're here to help! (800) 928-2055

Call us to speak with a customer service representative.

Subscribe to Our Newsletter

Get Weekly Updates

I agree that 55places and its affiliates, partner providers or agents may call, text, or email me about my inquiry, which may be made with automated means. I understand that my consent is not a prerequisite for buying a property. I may revoke my consent at any time by contacting Message/data rates may apply. I also agree to’s Privacy Policy and Terms of Use.

The Best Places to Snowbird in 2021

We’ve gathered 25 of the best places for snowbirds, including cities in Florida, Arizona, California, Texas, South Carolina, and Nevada. For each entry, we’ve also provided a list of recommended 55+ communities in the area. If you’re ready to find your own winter retreat this season, here are some of the best places to consider.

A 55+ couple relaxing in lounge chairs on the beach.

25 Cheap Active Adult Communities for an Affordable Retirement

From scenic locations to impressive amenities, these communities provide a range of opportunities for active adults to enjoy their golden years while staying within their budget. Let’s explore 25 active adult communities that offer an affordable retirement experience.

Interest Rate vs. APR (And Other Mortgage Questions)

The mortgage process is pretty complicated. Even if you’ve gone through it before, it’s easy to get tripped up with all the steps, documentation, and financial jargon of it all. Are you planning on applying for a mortgage soon? Before diving straight in, here are some answers to commonly asked mortgage questions.

Two 55+ active adults relaxing in lounge chairs by the beach.

How to Decide Which State to Retire In

It’s common for active adults to relocate to a new state for retirement, and with thousands of 55+ communities across the country, it’s difficult to find the perfect place without narrowing the search first by state. The best guideline is to move to a state that can provide the lifestyle you’re looking for.

An asthmatic 55+ woman reaching for an inhaler.

The Best Places to Retire If You Have Asthma

Climate, geography, and access to health care providers are all key considerations for those with a chronic health condition. Let’s explore some of the best places to retire if you have asthma and what factors may be particularly important to you in a retirement destination.

Happy senior couple relaxes while fishing together by the lake in their 55+ community.

55+ Communities for Lake Lovers: Discover the Top 5 Destinations

Boating, fishing, swimming, and other water sports are popular pastimes for many active adults. While these activities are frequently found in coastal areas, water-loving retirees can enjoy living inland when they choose a community that offers access to a lake!

A mature woman explores an art gallery with her granddaughter in one of her favorite retirement cities.

The 4 Best Places to Retire if You Love Art

Retirement is your chance to devote yourself to the pastimes you love! If you love art, a handful of places across the U.S. will suit you best. Today, the team at is here to explore communities all over the nation that you’re sure to love.

About 55places

We’re changing the way people 55 and older are searching for their perfect next place. With a national network of hand-selected real estate experts, plus comprehensive information, unbiased content, and on-the-go insight about thousands of communities across the country, we’re a trusted resource paving the way from here to home. Whether you’re interested in a low-maintenance single-level residence, an active lifestyle or age-qualified community, an intimate enclave, or anything in between, we can help you make your next move the best one yet.

Scroll to Top