Surprising fact: WalletHub’s 2025 ranking places Florida first overall for retirees, with Minnesota, Colorado, Wyoming, and South Dakota close behind.
I focus on one clear metric: actual cash outflow. I define “for money” as taxes you pay, recurring housing and insurance costs, plus healthcare access needed for long-term living.
I run hard numbers first: total state and local tax exposure, then cost living trade-offs that can erase apparent savings. I use WalletHub’s 2025 leaders and current rules on Social Security and withdrawals as anchors.
Why this matters: zero state income tax helps, but high sales or property taxes, plus insurance for coastal risk, can negate gains. I compare income streams and model real spending so you see which states deliver lower cash outflow.
Key Takeaways
- I prioritize taxes, housing, insurance, and access care when ranking states.
- Florida tops WalletHub 2025, but coastal risk raises insurance costs.
- No income tax states can still have high sales or property levies.
- I model Social Security, pensions, and withdrawals for real comparisons.
- You get a ZIP-code level plan to estimate true retirement cash needs.
How we define “for money” right now: factors, weights and present-day context
My framework converts state rules and local costs into a single retirement cash-flow number. I weight four core elements so comparisons reflect real spending, not headline tax rates.
Core factors:
- Taxes: state income tax on retirement income, Social Security treatment, property relief and sales exposure.
- Cost living by ZIP: housing, insurance premiums, utilities and HOA fees normalized to regional averages.
- Care access: hospital quality, specialist density and typical drive times for routine and specialty visits.
- Lifestyle value: amenities that cut transport and time costs while keeping you active.
I quantify taxes first, then layer insurance and care costs. Nine states still tax Social Security in 2025; several ended taxation in 2024 and West Virginia will phase out by 2026.
Time-sensitive updates matter: federal estate exemption sits at $13.99M in 2025 while some states keep low thresholds. Sales tax rates range widely across the country, which can erase apparent savings from zero income tax.
Taxes that matter most to retirees: where states help or hurt your wallet
I translate complex rules into clear dollar effects on your yearly cash flow. That reveals which levies cut fixed checks and which are mostly paper pain. Below I break down the items that change your net spending.
Income tax on retirement accounts
Many states tax withdrawals from 401(k)s, IRAs and traditional pensions. Alaska has no income tax; Mississippi exempts retirement account income.
Practical note: withdrawing $30,000 in a 4% effective state income tax jurisdiction adds about $1,200 in annual outflow compared with no-tax states.
Social Security treatment
Nine states still tax social security in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia. Missouri, Kansas and Nebraska removed that tax in 2024; West Virginia phases out by 2026.
Property relief and senior programs
Property taxes vary widely: New Jersey averages roughly $9,345 annually; Alabama about $701. Look for homestead caps, circuit breakers and deferral options that lock rate shocks.
Sales, exemptions and estate rules
Zero-sales-tax states include Delaware, Montana, New Hampshire and Oregon (Alaska local only). Some states top combined rates above 9.5% (Louisiana, Tennessee).
- Estate planning: federal exemption is $13.99M (2025); 12 states plus DC have estate taxes.
- Six states levy inheritance taxes; Maryland charges both estate and inheritance.
Cost of living versus taxes: why the lowest tax state isn’t always the cheapest
Sticker price seldom shows the full monthly drain on a retiree’s wallet. I map taxes against real household bills so you can see total outflow, not just a headline rate. Low income levies help, but they don’t erase high property, insurance or utility bills.
Housing costs and homestead exemptions
Housing type changes your bills: a single-family home can raise property assessments, while a condo moves costs into HOA dues. Many states offer homestead exemptions or circuit breakers for seniors; those cut volatility.
Everyday spending trade-offs in high sales tax states
High sales rates add up: Louisiana (9.565%) and Tennessee (9.556%) push more of your spending into taxes. Delaware, Montana, New Hampshire and Oregon have no sales tax; Alaska has local-only levies.
- I separate sticker price from total carry cost.
- I test timing: buying before reassessments can save thousands.
- Practical step: run a spreadsheet that lines up housing, insurance, utilities, transport and taxable spending by ZIP.
| Metric | Example | Impact on average yearly costs |
|---|---|---|
| Combined sales rates | Louisiana / Tennessee ~9.56% | Raises annual retail tax drag on big buys |
| Sales-free options | Delaware, Montana, NH, Oregon | Lower taxable spend for furniture/vehicles |
| Property relief | Homestead exemptions / circuit breakers | Stabilizes property outlays for seniors |
WalletHub’s 2025 leaders versus tax-friendly favorites: aligning rankings with reality
I line WalletHub’s top picks up against hard cash flows so rankings match real household bills. That exposes where tax rates and local costs pull rankings apart.
Top performers: Florida, Minnesota, Colorado, Wyoming, South Dakota
Florida ranks first overall: no income, estate or inheritance tax helps wallets. Elevated insurance and coastal living costs can reduce net gains.
Minnesota scores high on health systems like Mayo Clinic. Strong elder supports lift life outcomes despite colder weather.
Colorado blends low estate burden with active-living metrics. Good geriatric care and outdoor activities often offset modest tax hits.
Quality of life and health care can outweigh taxes in some states
Wyoming and South Dakota both avoid income taxes. Wyoming often posts lower combined property and sales burdens. South Dakota trades some sales pressure for expanding services in its hubs.
Population density matters: less congestion lowers time costs, but rural access can raise travel and specialist expenses. I weigh access to hospitals alongside tax math.
- I reconcile headline ranks with ZIP-level spending.
- I score activities, care access, and local life when totals diverge.
- Run yearlong projections before picking among the best states.
Florida vs. Delaware: low-tax heavyweights for retirees on a fixed income
I test Florida and Delaware using spending profiles, not just tax charts. That reveals which rules cut annual cash flow for typical retiree budgets.
Income, sales, property and estate taxes compared: Florida has no state income tax and no estate or inheritance levies. Delaware offers no sales tax and low property taxes; it also lacks estate and inheritance taxes.
Cost living and housing realities: Florida average home value is about $378,031; Delaware around $397,350. Coastal ZIPs raise insurance and purchase prices in both states. Miami and Tampa can add housing and insurance drag. Wilmington and beach towns trade higher purchase costs for lower ongoing sales exposure.
Access to care and senior services: Florida has dense provider networks and strong Older Americans Act funding per senior. Delaware delivers quality providers with quick routes to major hospitals, though congestion can add time costs.
Who likely wins for savings, and for whom
For those with large withdrawals, Florida’s lack of state income tax often yields more savings. For modest income with higher consumption, Delaware’s zero sales tax and low property taxes can save more.
| Factor | Florida | Delaware | Impact |
|---|---|---|---|
| Income rules | No state income tax | No state income tax on many retiree incomes | Favours large withdrawals |
| Sales / property | Sales taxes vary; homestead exemptions exist | No sales tax; low property taxes | Delaware lowers ongoing spend |
| Housing & insurance | Avg home ~$378k; hurricane insurance higher | Avg home ~$397k; lower insurance risk | Coastal ZIPs raise premiums |
| Care & services | Strong senior networks, high OAA funding | Quality providers; proximity to Philly/MD | Travel time matters |
Wyoming vs. South Dakota: no-income-tax standouts with different trade-offs
I compare total cash outlays, not headlines, when weighing Wyoming against South Dakota. Both avoid a state income tax, which benefits large withdrawals and makes simple projections cleaner.
Total tax burden: Wyoming typically pairs lower sales and property taxes, while South Dakota offsets no income levy with higher sales rates. That matters if you spend heavily on retail, services or vehicles.
Rural living and care access: population sparsity raises travel needs. Casper and Cheyenne anchor care in Wyoming; Sioux Falls serves South Dakota. Longer drives for specialists add time and mileage costs for many retirees.
Climate, safety and living trade-offs: Wyoming offers clean air and low violent crime, but winters are harsh. South Dakota cities concentrate amenities; rural areas on both states require planning for weather, heating and weatherization.
Who wins? Withdrawal-heavy, low-spend retirees may favor South Dakota despite sales tax. Owners with large property holdings or high consumption of taxable goods often find Wyoming’s lower overall burden more compelling. I run both $55,000 and $80,000 baskets before advising site visits and care-route checks.
| Factor | Wyoming | South Dakota |
|---|---|---|
| State income tax | None | None |
| Sales / tax rates | Lower average sales burden | Higher statewide sales rates |
| Property taxes | Generally low | Moderate |
| Care access | Casper, Cheyenne hubs | Sioux Falls major hub |
Tennessee vs. Arizona: stretching retirement income in different climates
I compare two distinct tax and climate mixes that change how far retirement income stretches. Both states do not tax social security, so that common ground helps many households.
No tax on Social Security, but sales and property taxes diverge
Tennessee has no state income tax and favors withdrawals from IRAs and 401(k)s. It also carries one of the highest combined sales rates (~9.556%), which hits big-ticket and frequent purchases.
Arizona avoids taxing Social Security too. It offsets that with reasonable property taxes, keeping owner costs predictable in many suburbs.
Healthcare access in Nashville, Phoenix and beyond
Care access matters: Nashville offers strong hospital networks; Phoenix and Scottsdale provide Mayo Clinic care and dense specialist coverage. For complex needs, Arizona can save travel time and co-pays.
Cost living and housing affordability comparisons
Tennessee’s average cost living runs about 10% below national average, which helps fixed income households stretch dollars. Arizona’s affordability pairs with high-quality care, and select Phoenix suburbs may justify slightly higher housing costs.
“Run a 12-month simulation of your retirement income and spending by ZIP to see which state truly saves you money.”
- Who may win: withdrawal-heavy, low-spend retirees often favor Tennessee.
- Who may prefer Arizona: spend-heavy households or those needing specialty care.
- Action: price utilities, HOA dues, and localized insurance before moving.
| Factor | Tennessee | Arizona |
|---|---|---|
| Social Security tax | Not taxed | Not taxed |
| Sales vs property | High sales rate; low property taxes | Moderate sales; reasonable property taxes |
| Care access | Nashville hospitals | Mayo Clinic Phoenix; Scottsdale specialists |
Minnesota vs. Colorado: paying a bit more for health outcomes and lifestyle
This comparison weighs modest extra taxes against clear gains in care access and daily activities. I run numbers on how each jurisdiction treats withdrawals, and then layer in local health and lifestyle value.
Social Security and income rules contrasted
Minnesota still taxes social security in 2025, though credits and limits reduce bite for many retirees.
Colorado also appears among states taxing Social Security; both apply income tax to retirement draws with differing brackets and deductions.
Care strength, active living and population signals
Minnesota benefits from Mayo Clinic and low violent crime; that care density can lower long-term acute costs.
Colorado pairs strong hospital networks with high physical-activity rates and outdoor options that boost longevity and daily satisfaction.
| Factor | Minnesota | Colorado |
|---|---|---|
| Social Security tax | Taxed with offsets | Taxed with state rules |
| Housing & insurance | Moderate market; local premiums | Higher home prices; outdoor risk varies |
| Care & activities | Mayo Clinic; lakes and communities | Active lifestyle; broad specialist access |
Recommendation: model your withdrawal profile and rent 3–6 months in each area. I show scenarios where paying slightly higher taxes buys fewer acute events and richer daily life. Update assumptions annually: SS rules and local rates can shift the math.
What state is the best to retire for money? My evidence-based short list
I rank finalists using net annual cash outflow, not headline rates. That keeps the focus on real savings after taxes, housing, insurance and care costs.
Best for lowest overall tax burden: Wyoming and Florida
Wyoming: no income tax, low sales and property burdens. Ideal for owners who want predictable carry costs.
Florida: no state income, estate, or inheritance levies. Watch coastal insurance premiums when sizing savings.
Best for balanced costs and care: Colorado and Delaware
- Colorado: strong health metrics and active living; no estate/inheritance taxes.
- Delaware: no sales tax and low property taxes; steady budgets for moderate spenders.
Best for stretching fixed income with amenities: Tennessee and South Dakota
Tennessee supports low cost living despite high combined sales rates (~9.556%).
South Dakota keeps taxes off withdrawals and offers solid amenities in Sioux Falls for those seeking value and services.
“Shortlist two states, then pressure-test ZIP-level insurance, utilities and care access before moving.”
| Profile | Who benefits | Primary trade-off |
|---|---|---|
| High withdrawals | Florida, Wyoming | Insurance & local costs |
| Balanced spend/care | Colorado, Delaware | Taxes vs. health access |
| Fixed income | Tennessee, South Dakota | Sales exposure vs. living cost |
Important 2024-2026 tax shifts retirees should watch
Tax rules are shifting fast; a single law change can add or subtract thousands from your annual cash flow.
I monitor three near-term moves that matter most for retirement planning.
States phasing out Social Security taxation
Missouri, Kansas, and Nebraska removed taxation of social security benefits in 2024. West Virginia will phase out that tax by 2026. These changes raise after-tax income for many households and affect timing decisions on moves and conversions.
Local property tax relief changes and homestead updates
Counties adjust homestead exemptions, circuit breakers, and deferral programs each year. That can shift your property taxes and cash-flow in a single reassessment cycle.
- Watch sales and local rates: ordinance changes affect big purchases and recurring spending.
- Scan income tax indexes: bracket tweaks change effective rates during Roth moves.
- Check estate thresholds: federal exemption is $13.99M (2025); state rules vary.
Actionable time tip: delay or accelerate a move based on pending SS treatment changes, and save assessor notices and revenue department updates for your projections.
Match your situation to a state: choose by tax, housing, health care and family needs
I help you map personal needs against taxes, housing, health care access and family ties. Pick a clear profile first: big savings with low withdrawals, fixed income with higher spending, or a homeowner versus renter.
High savings, lower income draw: estate and inheritance considerations
If you carry sizable savings and plan a modest retirement income draw, prioritize places without estate or inheritance levies. Florida, Delaware, Wyoming and South Dakota lack those taxes and often protect savings over time.
Tip: verify local property rules and caps so your savings aren’t eroded by surprise assessments.
Fixed income, high spend: sales tax and grocery/medical exemptions
For households on steady retirement paychecks who buy a lot, sales rules matter. Delaware, Montana, New Hampshire and Oregon levy no sales tax.
Also: many states exempt groceries, prescription drugs and medical equipment — that can preserve cash flow.
Homeowners vs. renters: property tax rates and deferral programs
Homeowners should check senior relief: exemptions, circuit breakers or deferrals can lower property taxes and stabilize living costs.
Renters benefit from moderate rent growth and transit access; lower travel reduces out-of-pocket life expenses and family visit costs.
- I align profiles: low withdrawal savers focus on estate rules and stable property regimes.
- I help spenders: zero-sales-tax or broad grocery and medical exemptions protect monthly budgets.
- I guide housing choices: compare HOA, insurance and local benefits before committing.
“Run a 12‑month simulation of your retirement income and spend by ZIP — that single exercise will expose hidden drains.”
| Profile | Priority | Example advantage |
|---|---|---|
| Large savings, low draw | Estate rules, property caps | Avoids state estate levies |
| Fixed income, high spend | Sales exemptions, grocery relief | No sales tax preserves monthly cash |
| Homeowner vs renter | Property relief vs rent growth | Deferrals and exemptions stabilize living |
How to pressure-test your top two states before moving
Run a 12-month, personalized projection before you commit. I start by mapping your actual retirement income and recurring bills. That reveals where apparent savings evaporate once local rules and living costs hit your budget.
Run a full-year tax simulation on your actual retirement income
I run Social Security, pension and IRA/401(k) draws through each jurisdiction’s brackets and credits. That shows true state income and federal interplay at real tax rates.
What I test: marginal income tax impact, state income exemptions, and likely bracket shifts if you convert or withdraw more in a year.
Price insurance, utilities and health networks by ZIP code
I price home and flood insurance quotes for the same coverage across ZIPs, then add utilities and HOA dues to capture cost living differences.
I also validate care access: in-network doctors, hospital wait times, and drive times for specialists. Sales tax exemptions (groceries, prescriptions, medical equipment) and combined rates over 9.5% in places like Louisiana and Tennessee get built into spending buckets.
- Simulate your year: run income through each state’s rules.
- Price the basket: apply local sales rules and exemptions.
- Quote the home: compare insurance, utilities, HOA.
- Map care access: confirm providers, wait times, drives.
| Step | What I measure | Outcome |
|---|---|---|
| Taxes | State income, tax rates, credits | Net annual tax delta |
| Costs | Insurance, utilities, sales rules | Adjusted cost living |
| Care & access | In-network providers, drive times | Service risk and travel cost |
Final check: I run an example side-by-side and evaluate weather risk, insurance volatility, and property tax deferral rules. Then I greenlight a 1–3 month furnished rental as a pilot before buying a home.
Conclusion
,Decisions should start with a side‑by‑side cash‑flow test, not with statewide averages. WalletHub’s 2025 leaders (Florida, Minnesota, Colorado, Wyoming, South Dakota) give a useful shortlist, but your numbers matter more than rankings.
I recommend this sequence: shortlist two places, simulate income, taxes and local cost living, then scout ZIPs and care networks before you sign on a home. Use the 2025 data points—zero‑sales‑tax states, the $13.99M federal estate exemption, and Social Security rules—as inputs.
Remember: population density, insurance quotes, and provider access change outcomes. Stay flexible: laws and insurance markets shift, so review your plan annually.
Act: simulate, visit, then decide with confidence — you can pick the best states for a retirement that fits your life in this country.
