10 best US states to retire in 2026

Picking a retirement state comes down to four questions. Does it tax your Social Security check? Does it tax your 401(k) withdrawals or pension? What does housing plus insurance actually cost? And can you get to a hospital within 30 minutes? Florida used to be the easy answer. Then homeowners insurance in coastal Florida crossed $10,000 a year and pushed retirees inland. Below is the 2026 ranking that most personal finance analysts converge on, followed by state-by-state tax detail so you can build your own shortlist.

Top 10 retirement states for 2026

Numbers below use the Tax Foundation, US Census, and BEA Regional Price Parity as sources. "Retirement tax friendly" means no or low tax on Social Security, pension income, and 401(k) or IRA withdrawals.

Rank	State	State income tax	Taxes Social Security?	Cost of living index
1	Wyoming	0%	No	92
2	Florida	0%	No	103
3	Tennessee	0%	No	90
4	South Dakota	0%	No	93
5	Nevada	0%	No	102
6	South Carolina	up to 6.2%	No	96
7	Texas	0%	No	93
8	Alabama	up to 5%	No	88
9	North Carolina	flat 4.5%	No	96
10	Arizona	flat 2.5%	No	108

Why Wyoming ranks #1 in 2026

Wyoming is the only state that combines every retirement-friendly tax feature in one place. There is no personal income tax, no estate tax, no inheritance tax, no tax on Social Security benefits, and no tax on 401(k) or pension distributions. State sales tax is 4%, the second lowest in the country after Colorado's 2.9%. Property tax averages about 0.55% of assessed value, compared to a national average near 1.1%.

The trade-offs are real. Winters are long, healthcare access outside Cheyenne and Casper is sparse, and the population is under 600,000 across nearly 100,000 square miles. Retirees who prioritize taxes over convenience settle in the Sheridan or Jackson corridors; those who want a bigger hospital system tend to pass.

Florida versus Tennessee: the head-to-head

Florida and Tennessee both hit zero income tax and zero Social Security tax. The gap is in property costs.

• Homeowners insurance: Florida averages about $6,000 annually statewide and above $10,000 in coastal counties like Miami-Dade, Broward, and Monroe. Tennessee averages about $2,000.
• Median home price: Florida sits near $400,000, Tennessee near $310,000.
• Property tax: Florida 0.91% effective rate, Tennessee 0.67%.
• Sales tax: Florida 6% state base, Tennessee 7% state plus local can reach 9.75%. Tennessee's sales tax is the highest average in the country.
• Climate: Florida gets year-round warmth, hurricane risk in June through November. Tennessee gets four full seasons, tornado risk in spring.

For a retiree drawing $60,000 a year from Social Security and a 401(k), Florida saves nothing over Tennessee on income tax, both are zero. The tie-breaker becomes housing plus insurance, and Tennessee wins that math in most counties.

The nine no-income-tax states, ranked for retirees

Nine states charge zero personal income tax. Not all of them are equally friendly to retirees:

1. Wyoming: the gold standard, low sales and property tax on top of no income tax.
2. Florida: famous for a reason, but insurance costs are the tax you did not budget for.
3. Tennessee: zero income tax since 2021 when the Hall tax on interest and dividends ended.
4. South Dakota: low property tax and cost of living, but harsh winters.
5. Nevada: zero income tax, high sales tax at 8.23% average, gaming revenue keeps other taxes low.
6. Texas: zero income tax but property tax averages 1.63%, one of the highest in the country.
7. New Hampshire: officially joined the no-income-tax club in 2025 when its interest and dividends tax expired.
8. Alaska: zero income tax and an annual dividend check from the Permanent Fund, but healthcare and cost of living are extreme.
9. Washington: no wage income tax, but a 7% capital gains tax on gains above $250,000 hits some retirees.

States that still tax Social Security

Forty-one states plus DC fully exempt Social Security. Nine states still tax at least part of it, though most have been rolling back their treatment year by year:

• Colorado: full exemption at age 65, partial for younger retirees.
• Connecticut: exempt below $75,000 (single) or $100,000 (joint) adjusted gross income.
• Minnesota: most retirees exempted in 2023 tax reform, high-income retirees still pay.
• Montana: follows federal taxable amount.
• New Mexico: exempt below $100,000 (single) or $150,000 (joint).
• Rhode Island: exempt below income thresholds.
• Utah: tax credit based on income.
• Vermont: exempt below thresholds.
• West Virginia: phasing out fully by 2026.

Estate and inheritance tax to watch

Twelve states plus DC charge an estate tax above federal exemption limits. Six states charge an inheritance tax paid by the recipient. If you plan to leave money to family, these matter as much as income tax.

• Estate tax states: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, plus DC.
• Inheritance tax states: Iowa (phasing out), Kentucky, Maryland (also estate), Nebraska, New Jersey, Pennsylvania.
• Zero estate and inheritance tax: Florida, Texas, Tennessee, Wyoming, Nevada, South Dakota, and 30 others.

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