Surprising fact: the median price of existing U.S. homes hit $435,300 in June 2025 — housing now drives where retirement dollars stretch.
I define the financially best place through taxes, housing costs, healthcare access, and savings. I use Tax Foundation rankings and IRS millionaire density to pair policy with where high earners actually live.
I follow the money: Wyoming and Florida rank high on tax competitiveness and show strong average savings and net worth in Empower data. I also note nine states with no state income tax, which can boost after-tax income for many households.
My goal: blend data and lifestyle. I’ll compare living costs, home values, and tax rules so you can test scenarios that match your income mix and life priorities.
Key Takeaways
- I set clear criteria: taxes, cost, healthcare, housing, and savings.
- Housing costs — $435,300 median — heavily shape retirement choices.
- Tax Foundation and IRS data highlight states like Wyoming and Florida.
- No state income tax can help, but local costs may offset gains.
- Use scenario planning: model your income, savings, and home status.
How to define the “financially best” state to retire in today
I use a clear framework: weigh tax exposure, local housing burden, healthcare access, and after-cost income. This lets me compare places across the United States using consistent metrics.
Balancing state income tax, cost of living, and healthcare access
I define the composite by four pillars: state income tax exposure, overall cost living, Medicare and plan availability, and housing affordability. Each pillar affects how far retirement dollars stretch.
I weigh income sources differently: Social Security, pensions, and withdrawals face varied tax treatment. That changes your effective tax rate and available cash.
Using present-time data sources and why they matter
I rely on the Tax Foundation’s 2025 Competitiveness Index and IRS 2022 AGI maps. The Index captures rates across property, sales, corporate, and individual taxes. IRS data show where high AGI filers concentrate — a useful lifestyle signal.
- I adjust for Medicare Advantage, Part D, and Medigap cost differences across locales.
- I flag where low taxes are offset by steep housing or living costs.
- I weight categories to reflect typical retiree spending patterns.
Actionable takeaway: use this framework when comparing places so your personal income, housing plans, and health needs drive the final ranking among best states.
Follow the money: taxes versus cost of living trade-offs
I track money flows so tax rules meet real-world living costs. The headline matters: median U.S. existing-home price reached $435,300 in June 2025, and that number dominates budgets.
When low taxes don’t beat high housing costs
A 0% income tax helps on paper. But high home prices or rents can erase that gain fast.
For renters without homestead relief, elevated rents outweigh small income savings. For owners, steep property taxes or insurance push monthly bills higher.
How spending patterns in retirement shift tax impact
I watch where retirement income comes from: Social Security, Roth, or pre-tax withdrawals. If most cash is Roth or Social Security, income tax cuts matter less.
- Example: $30,000 withdrawal at a 4% income tax = $1,200. A $400 monthly rent gap costs $4,800 annually.
- Medical premiums and out-of-pocket costs can swing 10–20% by locale.
- States with modest rates and retirement exemptions can outperform no-tax places for some profiles.
Action: pair your income mix with property taxes, home price or rent, and typical taxed spending to see the true all-in cost.
Head-to-head: Wyoming vs. Florida for a tax-smart retirement
This head-to-head looks at tax rules, lifestyle signals, and household balance sheets for both places. I focus on practical trade-offs: taxes, housing, healthcare, and savings data that matter for planning.
State tax profile and local levies
Both places levy no state income tax, yet they diverge on overall tax burdens. Tax Foundation 2025 ranks Wyoming #1 and Florida #4, reflecting broader differences in tax rates and bases.
Millionaire density and lifestyle signals
IRS 2022 millionaire-density: Florida 69.78 vs. Wyoming 62.69 per 10,000 filers. That edge suggests Florida supports more high-end services, which affects lifestyle and amenity access.
Savings and net worth context
Empower (Aug 2025) shows similar household strength: Wyoming avg retirement savings $500,528; avg net worth $617,364. Florida posts $519,724 and $619,823. Both look robust for many retirement plans.
Who wins depending on your plan
- Homeowners: Florida’s homestead relief and exemptions often tilt math for buyers in many counties.
- Spend-heavy retirees: county sales taxes, insurance, and HOA fees can favor Wyoming except near resort towns.
- Healthcare-first: Florida’s denser provider networks usually lower premiums and improve access.
| Metric | Wyoming | Florida |
|---|---|---|
| State income tax | No | No |
| Tax Foundation rank (2025) | #1 | #4 |
| Millionaire density (per 10k) | 62.69 | 69.78 |
| Avg retirement savings (Aug 2025) | $500,528 | $519,724 |
| Avg net worth | $617,364 | $619,823 |
Verdict: choose Florida when healthcare, service variety, and millionaire-backed amenities matter most. Choose Wyoming when you prefer low population density and top-ranked tax competitiveness. Run your income mix against local property, sales, and insurance costs before picking a home.
Secondary matchup: Texas vs. New Hampshire on state income and property taxes
I compare two contrasting tax mixes that shape everyday costs and long-term home bills.
No income tax, homestead shields, and property realities
Texas has no state income tax and offers robust homestead exemptions and caps that often cut taxable value for longtime owners. That protection can lower annual bills for seniors who keep a single home.
New Hampshire does not tax wage income and levies no general sales tax. It funds services largely through property levies, so towns rely on high property taxes instead of broad-based income receipts.
Sales exposure and everyday spending
Daily costs diverge: Texas carries combined sales rates that commonly exceed 8%–9%. New Hampshire’s lack of a general sales tax lowers routine spending on goods.
- Both rely heavily on property taxes: local rates vary widely, so neighborhood choice matters.
- Neither imposes an estate or inheritance tax, which simplifies legacy planning compared with many Northeastern locales.
- Healthcare access: Texas offers broad metro networks; New Hampshire gives easy access to Boston specialists for complex care.
“Headline ‘no income tax’ doesn’t equal the lowest total tax bill.”
Practical tip: run actual property bills and local sales rates for target towns. Downsizing plus Texas homestead benefits can offset higher sales exposure; buying in a lower-rate New Hampshire town can save thousands annually.
Mountain value: South Dakota vs. Montana for low-tax living
I compare two Mountain-region options where tax design and seasonal costs shape real retirement choices.
Tax Foundation competitiveness and practical retiree implications
Tax Foundation 2025: South Dakota ranks #2; Montana ranks #5. South Dakota has no income tax, which favors pretax withdrawal households.
Montana lacks a general sales tax, which lowers everyday living costs for shoppers. Property tax levels tend to be moderate in both, but county differences drive actual bills.
- Profile fit: heavy IRA/401(k) withdrawers lean toward South Dakota; frequent goods spenders may prefer Montana’s sales advantage.
- Lifestyle and home: Montana’s university towns and resorts deliver culture but can push home prices. South Dakota’s metros like Sioux Falls offer steadier affordability.
- Healthcare and winter: rural access can be limited; factor travel for specialty care and higher seasonal energy costs.
| Metric | South Dakota | Montana |
|---|---|---|
| Tax Foundation rank (2025) | #2 | #5 |
| Income tax | No | Yes |
| General sales tax | Yes | No |
| Typical home affordability | Generally lower | Varies; resort premiums |
“Both rank among the top five for competitiveness; your spending mix and desired lifestyle decide the winner.”
Action: run your income mix against local property bills, energy estimates, and healthcare access before choosing where states retire plans land.
What state is best financially to retire in?
My synthesis blends tax rankings, home prices, care access, and lifestyle indicators into a short list.
Synthesizing tax burden, housing, healthcare, and millionaire-lifestyle indicators
Shortlist: Wyoming and Florida surface most often when I merge Tax Foundation rank and IRS millionaire-density signals. Both pair low tax exposure with strong amenity networks.
Expanded bench: South Dakota, Montana, Texas, and New Hampshire also score well when I balance taxes, housing, and access to care.
Housing matters: the national median home price of $435,300 makes the home you buy more decisive than a small tax rate gap.
I weigh healthcare and rates: Florida’s dense provider networks often lower premiums and improve access. Property and sales tax rates can erase a no-income-tax advantage for some retirees.
- I match retirement income types (pensions, Social Security, withdrawals) to state rules.
- I use millionaire filings and amenities as lifestyle proxies: Florida and Texas offer breadth; Wyoming and Montana offer quiet.
- Result: homeowners with large pretax withdrawals often favor no-income-tax places; heavy spenders or renters may prefer lower sales or property levies.
Keep the model current: laws and rates change, so update your scenario yearly before you move.
Bottom line: the answer depends on your income mix, home plan, and healthcare needs. Florida and Wyoming frequently top my list, with South Dakota, Montana, Texas, and New Hampshire close behind.
Social Security benefits: where your checks are taxed and where they aren’t
Taxing rules for Social Security payments can quietly reshape your annual cash flow and planning priorities.
The nine states that still tax Social Security and key phaseouts
As of 2025, nine states tax Social Security: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Recent changes matter: Missouri, Kansas, and Nebraska ended taxation beginning 2024. West Virginia phases out entirely by 2026.
No-tax and exemption states that protect retirement income
- No state income tax: Florida, Texas, Wyoming, South Dakota do not tax Social Security at the state level.
- Many income-tax states still offer deductions or credits that shelter much of eligible benefits.
- Federal provisional income rules still affect federal tax on benefits; withdrawals from an account can push you into higher brackets.
| Category | Example | Planning note |
|---|---|---|
| Taxing states | CO, CT, MN, MT, NM, RI, UT, VT, WV | Check phaseouts and age thresholds; rates vary by local rules |
| No-tax states | FL, TX, WY, SD | Protects most security benefits; still watch property and sales rates |
| Recent eliminations | MO, KS, NE (2024) | Updates change migration math; verify current-year guidance |
“Exemptions, not headline rates, often decide what you actually pay.”
Action: sequence withdrawals, consider Roth conversions, and run your provisional-income test for a current-year check. Review estate rules too — they affect legacy planning alongside benefit taxation.
Retirement income, pensions, and account withdrawals by state
I review how withdrawals and pensions are taxed across the country and the real dollar effect on monthly budgets.
States with full exemptions versus partial treatment
I map jurisdictions that fully exempt IRA and 401(k) distributions, those that give partial breaks, and those that tax withdrawals with few deductions.
Examples: Alaska imposes no income tax; Mississippi exempts many retirement account distributions. By contrast, several states offer limited or no deductions.
Rule of thumb: at a 4% effective state rate, a $30,000 withdrawal costs $1,200 annually — not huge, but it compounds over time.
Government vs. private pension rules and age thresholds
Many places treat government pensions more favorably than private pensions. Deductions, caps, and eligibility ages vary by jurisdiction.
Some states activate larger senior deductions at specified ages. Coordinate start dates for pensions and Social Security to reduce taxable income in early years.
- I separate full-tax states from those with credits or age-limited exclusions.
- I note flat versus graduated rates: the structure changes marginal cost as withdrawals change.
- I stress portability: move after benefits start and sourcing rules may alter tax treatment.
| Feature | Typical impact | Example jurisdictions |
|---|---|---|
| No state income tax | Protects most withdrawals and pensions | Alaska, Florida, Texas |
| Full exemptions for accounts | Zero tax on IRA/401(k) withdrawals | Mississippi (many distributions) |
| Partial credits or age-based breaks | Reduces tax for qualifying retirees | Various states with senior credits |
“Exemptions and timing often matter more than headline rates — sequence withdrawals and test scenarios.”
Actionable steps: model your withdrawal sequencing: blend Roth, HSA, and taxable accounts; calculate state income exposure; and test multiple locations across a 30-year plan before moving.
Property taxes, sales taxes, and estate/inheritance taxes that hit retirees
Local property levies and sales charges can quietly erode retirement budgets more than income rules. I track where routine bills add up: yearly home charges, everyday sales taxes, and end-of-life levies.
Senior relief: homestead exemptions, circuit breakers, deferrals
Relief tools matter: homestead exemptions cut a home’s taxable value. Circuit breakers cap annual increases. Deferrals postpone payments until sale or estate settlement.
Income limits often apply. Use these tools if cash flow is tight or you plan to stay long-term.
Sales ranges and common retiree exemptions
Four states spare general sales: Delaware, Montana, New Hampshire, Oregon. Alaska has no statewide sales but allows local levies. Louisiana and Tennessee have combined rates near 9.56%.
Groceries, prescriptions, and medical equipment are commonly exempt, easing burden on retirees who spend on essentials.
Estate thresholds and inheritance rules
The federal estate exemption sits at $13.99M for 2025. Twelve states plus DC levy estate taxes; Oregon’s exemption is about $1M. Six states impose inheritance taxes; Maryland has both estate and inheritance levies.
| Category | Example | Typical impact | Notes |
|---|---|---|---|
| Property tax spread | New Jersey vs Alabama | ~$9,345 vs ~$701 annually | Can exceed $8,600 gap; dwarfs small income tax differences |
| Sales tax extremes | DE, MT, NH, OR vs LA, TN | No general sales vs ~9.56% combined | Local rules change the math; check county rates |
| Estate & inheritance | Federal & state | $13.99M federal; OR $1M state | Maryland: both estate and inheritance apply |
“Exemptions and titles often determine what heirs actually pay.”
Action: compare county bills, evaluate deferral options, and review how you title accounts and property if leaving a legacy matters.
Healthcare access and costs: Medicare plan variability across states
Medicare plan availability and regional care access shape how far retirement dollars go each year. I focus on measurable differences: premiums, plan choices, and out-of-pocket exposure across states.
Medicare Advantage, Part D, Medigap, and out-of-pocket differences
Plan mix matters: Medicare Advantage penetration, Part D premium tiers, and Medigap pricing vary by state. These differences can change annual health costs materially.
- I quantify the stakes: some couples may need as much as $413,000 for healthcare over retirement.
- Provider density usually lowers out-of-pocket rates: large metros offer more specialists and competitive plans.
- Match formularies and networks if you need specific drugs or specialists; that priority can guide which states make sense.
How I integrate taxes, timing, and cost living
I bundle HSA tax benefits, state taxes on medical items, and travel for care into the total cost picture. Supplemental dental and long-term care access also shift living expenses by region.
Action checklist: compare Medigap quotes, Part D tiers, Advantage star ratings, and provider density in target states before you move. Time your enrollment and any move to avoid mid-year coverage gaps.
The best place on taxes may not be best for healthcare access; evaluate both to avoid surprise costs.
Cost of living and housing: the biggest line item in retirement
I model housing as the largest, ongoing cash flow for most households. With the U.S. median existing-home price at $435,300 (June 2025), the choice to buy or rent often outweighs modest differences in state tax rules.
I compare rent versus buy clearly: renting avoids property taxes and major maintenance, but rents can spike. Buying fixes principal and interest for a time, yet adds property taxes, insurance, and upkeep.
Regional trade-offs and long-range planning
Coastal metros typically carry higher home and insurance bills; interior states usually offer lower carrying costs and more affordable home options.
I model five- and ten-year cash flows rather than just first-year prices. That captures rate shifts, assessment growth, and insurance surprises.
Practical levers and alternatives
- Factor HOA, flood/fire/hurricane insurance, and assessment risk into yearly budgets.
- Consider renovation or aging-in-place credits: retrofitting can beat moving costs.
- Explore house hacking, ADUs, or 55+ communities for reduced net housing expense.
Transportation matters: walkability or transit access lowers car spending over decades and changes the total cost picture.
“Build a multi-year budget line-by-line: mortgage, property taxes, HOA, insurance, maintenance, and transit.”
Action step: create a spreadsheet that compares these line items across candidate states and towns for five- and ten-year horizons. That simple tool turns sticker price into realistic retirement planning.
Honorable mentions: Arizona, Tennessee, Delaware, and South Carolina compared
I profile four practical options that balance tax treatment, healthcare access, and lifestyle while keeping living costs competitive.
Arizona
Tax & benefits: No tax on social security benefits. That preserves regular checks for daily expenses.
Healthcare: robust networks, anchored by Mayo Clinic Phoenix. Affordability: ranked third-most affordable for many retirees.
Tennessee
Tax & benefits: No state income tax, which helps pretax withdrawals remain net-positive.
Living costs: roughly 10% below national averages, though combined sales taxes run high. Housing: solid suburban options that support lower home bills.
Delaware
Tax & benefits: No general sales tax and exclusions up to $12,500 for residents 60+. No estate or inheritance taxes simplifies legacy planning.
Cost: everyday spending falls; housing tends toward suburban affordability near coastal towns.
South Carolina
Tax & benefits: Social Security excluded; additional deductions on retirement income and low property taxes help cash flow.
Healthcare capacity is expanding. Housing: diverse markets from historic cities to coastal communities fit varied lifestyle goals.
| State | Tax note | Healthcare | Housing |
|---|---|---|---|
| Arizona | No tax on Social Security | Strong, Mayo Clinic hub | Wide range; affordable pockets |
| Tennessee | No income tax | Good metro networks | Suburban-friendly affordability |
| Delaware | No sales tax; income exclusions 60+ | Coastal access to care | Suburban and small-town options |
| South Carolina | SS excluded; retiree deductions | Growing capacity | Historic and coastal choices |
Match profiles: shoppers favor Delaware’s no sales tax. Social Security–dependent households often prefer Arizona or South Carolina. Heavy pretax withdrawers may find Tennessee attractive.
Use south dakota and new hampshire as low-tax benchmarks, then test HOA, insurance, property tax, and local healthcare for final fit.
Action: run a shortlist test: compare local housing, insurance, and provider access before you pick a final candidate.
Conclusion
Conclusion: I wrap with a short, practical checklist. Florida and Wyoming most often top my shortlist when I merge Tax Foundation 2025 ranking with IRS millionaire-density and healthcare access.
Close contenders include South Dakota, Montana, Texas, and New Hampshire depending on your income mix, account sequencing, and home plans.
Focus your analysis: model withdrawals, map county property taxes, price local homes around the $435,300 median, and add sales and estate exposure. Compare rates, insurance risk, and provider networks before you move.
Shortlist two or three states, run year-by-year cash flows, and revisit this plan annually. Laws, markets, and your needs change — keep your chosen state aligned with your savings and life stage.
