Surprising fact: U.S. median existing home price hit $435,300 in June 2025, and healthy couples can still face roughly $413,000 in medical bills over retirement years.
I’ll be direct: I anchor this article on objective money metrics so you can make confident choices this year. I pair tax competitiveness with where high earners file, then weigh cost pressures and healthcare realities.
Why it matters: housing often drives more of your retirement budget than any single factor. Location alters Medicare Part D, Advantage, and Medigap premiums, which changes out-of-pocket risk for retirees.
I preview my approach: compare taxes, cost pressures, and lifestyle trade-offs across states. Data points point to Wyoming and Florida near the top, but your life goals and needs decide what fits best.
Key Takeaways
- I set expectations: “best” depends on personal goals, yet money metrics guide decisions.
- Housing costs now shape retirement budgets more than usual this year.
- Healthcare plan costs vary by state and affect long-term cash flow.
- Wyoming and Florida score high on tax and savings data, but lifestyle matters.
- The article compares taxes, living costs, and plan options so you can match choices with needs.
How We Compared States: Taxes, Cost of Living, Healthcare and Lifestyle
My checklist blends tax math, housing reality, and healthcare exposure into one score. I use repeatable metrics so you can compare options across states and make choices that lower long-term risk.
Present-day context: what matters most for retirees right now
Housing now dominates budgets: median existing home price sits near $435,300 (June 2025). I weight shelter and regional costs more heavily because elevated prices shift withdrawal needs and affect effective tax burdens.
Healthcare also changes cash flow. Wide variation in Medicare Part D, Advantage, and Medigap premiums alters lifetime exposure—couples can face roughly $413,000 in medical spending over years.
Data sources and criteria used for this comparison
- I use the Tax Foundation’s 2025 State Tax Competitiveness Index to capture income, sales, corporate, property/wealth, unemployment insurance, and excise elements.
- I pair that with 2022 IRS millionaire return density as a lifestyle signal where high earners cluster.
- I normalize for income sources: Social Security, pensions, IRA/401(k) withdrawals, so effective tax outcomes match real retiree mixes.
- I calibrate to present prices and include healthcare premium variability so comparisons reflect true out-of-pocket risk.
Bottom line: I focus on total tax structure, realistic living costs, access to care, and lifestyle fit—these are the factors that actually shape retiree outcomes.
Follow the Money: Tax Competitiveness Meets Millionaire Density
Money flows reveal which places reduce friction on withdrawals and savings.
Tax structure and where wealthy filers live offer a practical lens for planning retirement. I compare the 2025 Tax Competitiveness Index with IRS millionaire return density to find overlap that matters for income and rates.
Tax Foundation Index highlights
Top performers: Wyoming, South Dakota, Alaska, Florida and Montana lead thanks to simple systems that lower overall tax drag. Low state income and lean regimes translate into cleaner, predictable rates for withdrawals and savings.
Millionaire return density
High-density states show where affluent households choose to locate. Florida (69.78), Wyoming (62.69) and Texas (54.20) appear near the top, signaling amenities and services that attract retirees with sizable portfolios.
Overlap and why it matters
When a low-tax ranking and strong millionaire presence coincide, you often get two benefits: less tax leakage on income and robust local infrastructure that supports life needs.
- I highlight Wyoming and Florida as clear overlaps: favorable state tax design plus affluent migration.
- Texas joins as a runner-up: tax-friendly rules and high millionaire density.
- Montana and New Hampshire rank well on taxes even if millionaire density trails.
| Metric | Top Tax Rank (2025) | Millionaire Density (IRS 2022) | Practical Takeaway |
|---|---|---|---|
| Wyoming | 1 | 62.69 | Low state tax burden, notable wealthy in-migration; strong choice for savings preservation |
| Florida | 4 | 69.78 | No broad income tax, high millionaire density, coastal amenities that support retirement life |
| Texas | 7 | 54.20 | No state income tax, growing affluent base; watch housing and local levies |
| South Dakota | 2 | — | Top tax competitiveness but lower millionaire density; strong tax case for income-heavy retirees |
What State is the Best Financially to Retire In? Wyoming vs. Florida
I lay out side-by-side differences that matter for income, home costs, and care.
Tax impact: Both Wyoming and Florida levy no state income tax and exclude social security benefits from income. That immediately preserves more of retirement distributions and reduces withdrawal friction.
Sales, property and relief: Florida’s homestead exemption can cut assessed value and lower property taxes. Wyoming’s low local levies keep annual bills modest. Compare your ZIP code for big swings.
Healthcare and out‑of‑pocket risk: Medicare Part D, Advantage, and Medigap premiums vary by place. In a high-cost year, medical bills can overwhelm small tax rate differences; plan and shop plans yearly.
Housing and living: With median existing home price near $435,300, neighborhood choice—Miami versus Jackson Hole—dominates your cost profile. Couples should also model up to $413,000 in potential healthcare exposure over retirement.
Life and weather trade-offs: Florida offers beaches, flights, and warm climate; Wyoming delivers low density, mountains, and cold winters. Insurance and lifestyle preferences matter as much as taxes.
“Both locations rank highly on tax competitiveness, so pick based on property relief, healthcare access, and how you want to live day to day.”
For a broader ranking and more comparisons, see my roundup at best and worst states for retirement.
Tax Deep Dive: Income, Social Security, Retirement Withdrawals and Estate Rules
I break down tax rules that most sway retirement income and heir outcomes. This helps you model withdrawals and plan timing.
No‑income‑tax states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming remove the state bite on wages and many retirement distributions. That boosts net withdrawal power for many retirees.
Social Security rules: Nine states still tax social security in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, West Virginia. Many apply thresholds or credits; check formulas before you move.
Retirement accounts vary: many states tax 401(k)/IRA withdrawals. A few offer full or partial exemptions for pensions and public benefits (for example, Mississippi provides notable exclusions). Sales tax structure also matters: Delaware, Montana, New Hampshire, Oregon have no state or local sales taxes.
| Issue | Typical impact | Action |
|---|---|---|
| No income tax | Higher net retirement income | Favor pretax withdrawals, smaller Roth conversion needs |
| Social Security taxation | Can raise effective tax rates | Model state formulas and claim timing |
| Estate & inheritance | State exemptions vary; some low thresholds | Plan domicile, trusts, or gifting to reduce exposure |
“Use low-income years for Roth conversions and revisit plans annually to manage tax rates and IRMAA exposure.”
Property Taxes and Senior Relief: Homestead Exemptions, Circuit Breakers and Deferrals
Property levies can change a retirement budget faster than small bracket shifts. I look at how annual bills vary and which relief tools matter most for seniors.
Across the U.S., burdens swing widely: New Jersey owners often pay about $9,345 yearly, while Alabama averages near $701. That gap alters cash flow more than minor income tax tweaks.
Relief options matter. Homestead exemptions lower assessed value for primary residences and often include income limits. Circuit breakers cap increases or cut bills relative to income. Deferrals let you push payments until sale, though liens and interest apply.
- Benchmark: large swings in property taxes can dwarf small rate changes in retirement budgets.
- Check rules: verify eligibility, residency tests, and appeal timelines for assessed values.
- Timing: plan improvements or reassessments for lower-income years to maximize savings.
| Item | Typical effect | Action |
|---|---|---|
| High local burden (NJ example) | Raises annual outflow by thousands | Appeal assessments; consider downsizing |
| Homestead exemption | Lowers taxable base for primary homes | Confirm county limits and apply |
| Circuit breaker | Caps tax relative to income | Check eligibility; see circuit breaker credits |
| Deferral | Preserves liquidity now; shifts payoff | Plan estate settlement and interest costs |
Practical step: verify assessed value methods and appeal windows. A successful appeal lowers both base and annual bills, freeing savings for care or travel.
Cost of Living Reality Check: Housing, Healthcare and Everyday Expenses
Your ZIP code can change lifetime spending far more than a one-point tax difference. At a national level, median existing home price hit $435,300 in June 2025, which means shelter dominates many budgets.
Housing trends and why location choice dominates
I prioritize shelter: metro and neighborhood choice often shift your cost living more than picking between two low-tax states. A cheaper list price with high HOA, insurance, or flood premiums can erase headline savings.
Healthcare premiums and plan variability
I quantify health impact: couples may face up to $413,000 in medical spending over retirement. Medicare Part D, Advantage, and Medigap premiums vary by ZIP code and plan type, so shop annually to control costs without sacrificing coverage.
Sales exposure and essentials
I assess sales exposure: four states (Delaware, Montana, New Hampshire, Oregon) levy no sales tax. Many states exempt groceries, prescriptions, and medical equipment—these rules lower everyday costs for seniors and retirees on fixed income.
- Decision rule: let housing and healthcare dominate your model.
- Adjust: add sales tax, commuting, weather-driven utility and maintenance costs.
- Tip: align withdrawals with high-cost months to smooth cash flow.
“Let shelter and care drive your planning; everything else fills in after you lock those two numbers.”
Strong Contenders Beyond the Top Two: Texas, New Hampshire and Montana
D: Look past headlines: mid-ranked locations can deliver larger net savings for certain income mixes.
I profile three appealing options that often match realistic retirement income plans. Each offers different trade-offs on taxes, sales exposure, property bills, and climate.
Tax profiles and cost-of-living advantages
Texas: ranked #7 for tax competitiveness and #10 for millionaire density. No state income tax. Big-city hospitals and strong markets help if you rely on pretax withdrawals and want amenities.
New Hampshire: #6 on tax competitiveness. No general sales tax and no wage tax; interest and dividends rules are phasing out. Low consumption taxes suit those who spend from Social Security or Roth savings.
Montana: #5 on tax competitiveness and no statewide sales tax. Good for frugal households focused on savings, but check property levies and winter costs before moving.
- South Dakota: noted as #2 overall on tax lists and no state income tax; simple administration favors high retirement income households optimizing lifetime tax rates.
- If most income is Social Security and Roth, property and sales structures often matter more than state income headlines.
Who might prefer each option
Choose Texas if you want healthcare hubs and urban life. Pick New Hampshire for low consumption taxes and New England access to Boston care networks. Favor Montana for low sales exposure and rural savings, but plan for harsh winters.
Practical test: rent for a year before you commit. Validate insurance premiums, seasonal costs, and local services across months and years.
| State | Tax rank | Key advantage | Primary trade-off |
|---|---|---|---|
| Texas | #7 | No state income tax; strong healthcare | Heat, property and local levies can vary |
| New Hampshire | #6 | No general sales tax; proximity to Boston | Winter climate; evolving dividend tax phase-out |
| Montana | #5 | No statewide sales tax; favorable rank | Cold winters; check county property levies |
| South Dakota | #2 | Elite tax policy; simple rules | Rural life may limit amenities |
Rule of thumb: align climate and life preferences with tax and cost benefits; a year of local living reveals hidden costs and preserves savings.
Retiree-Friendly Alternatives With Balanced Benefits: Florida, Arizona, Tennessee, Delaware and South Carolina
Here are sensible alternatives that keep retirement income working while matching lifestyle goals. I focus on tax rules, daily costs, care access, and weather so you can pick a fit that suits family and life plans.
Arizona
Perk: no tax on Social Security and affordable living in many metros.
Healthcare hubs such as Phoenix and the Mayo Clinic network give strong access for retirees. If you’re looking for sun and lower housing premiums than coastal metros, Arizona fits well.
Tennessee
Perk: no income tax and roughly 10% below national cost living in many areas.
Cultural life, music scenes, and reputable hospitals in Nashville and Memphis balance low costs with amenities for seniors.
Delaware
Perk: no sales tax and retiree income exclusions for residents over 60.
Residents can exclude up to $12,500 of certain investment and pension income. No estate or inheritance taxes simplify legacy plans for family.
South Carolina
Perk: no tax on Social Security and strong deductions on other retirement income.
Low property focus plus growing health networks make this attractive for seniors who want beaches, history, and lower annual bills.
Florida (revisited)
Perk: no state income tax, homestead exemptions, and large retiree communities.
Healthcare access is strong, but housing costs swing dramatically by metro. Match local prices with your retirement income plan.
- Match benefits to profile: Delaware favors higher spenders who benefit from no sales tax. Arizona and South Carolina help Social Security‑heavy retirees.
- Consider weather: dry heat in Arizona, humid coast in South Carolina, four seasons in Tennessee, and Mid‑Atlantic weather in Delaware.
- Family lens: proximity to loved ones lowers travel costs and raises life satisfaction—factor that along with taxes and rates.
| State | Prime tax perk | Primary draw |
|---|---|---|
| Arizona | No Social Security tax | Affordability, strong hospitals |
| Tennessee | No income tax | Low cost living, cultural life |
| Delaware | No sales tax; retiree exclusions | Daily savings, estate simplicity |
“Pick a place that protects your retirement income and fits daily life—tax breaks help, but weather, care, and family seal the decision.”
Conclusion
Make choices with modeled years of cash flow rather than one snapshot of rates.
I recommend a data-first shortlist: Wyoming and Florida stand out for tax competitiveness and millionaire density. Texas, New Hampshire, and Montana follow with strong tax profiles. Delaware, Arizona, Tennessee, and South Carolina offer balanced packages that help seniors with sales tax breaks, social security exclusions, or property relief.
Remember national context: median existing home price remains near $435,300 and couples may face roughly $413,000 in medical costs over retirement. Model property taxes, Medicare variability, and cost living across years, not just a single rate this year.
Action steps: run multi-year cash-flow scenarios, rent locally for a year to verify insurance and service access, then optimize withdrawals and revisit tax rules annually. Align climate, family proximity, and daily life with the place that meets your needs—not a single index rank.
