Photo by Vitaly Gariev on Unsplash
What's on the Table
Nine. That's how many U.S. states collected zero broad-based individual income tax as of 2025 — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — which means a retiree's Social Security check, pension, and 401(k) withdrawals all land untaxed at the state level. According to Google News, Investopedia's coverage of where retirees can escape state taxes on retirement income put that list back in front of readers, and it is worth examining with a calculator rather than a moving truck.
As of August 31, 2026, the underlying policy picture is the one the Tax Foundation has documented: nine no-income-tax states, with New Hampshire joining the group after fully phasing out its interest-and-dividends tax effective January 1, 2025. That last detail matters more than it sounds. New Hampshire spent decades in a gray zone — no wage tax, but a levy on investment income, which is precisely the income a retiree living off a portfolio generates. The phase-out closed that gap.
But the honest framing is this: the goal is not "pay zero state income tax." The goal is a higher after-tax income for the same portfolio, and those are different targets.
Side-by-Side: Where the Nine-State List Misleads
Here is what the surface reporting usually skips. A state has to fund schools, roads, and Medicaid somehow. If it does not tax income, it taxes something else — and for retirees, that "something else" is usually property.
Kiplinger's state-by-state breakdowns routinely flag this offset, and it changes the arithmetic in a way the nine-state headline cannot capture. Consider a retiree drawing $60,000 a year from a mix of Social Security, a pension, and IRA withdrawals, living in a state with a flat 4% income tax. Moving to a zero-tax state saves roughly $2,400 a year on the income line. Now suppose the destination's property tax bill on a comparable home runs $3,000 higher annually. The move is net negative by about $600 a year — before counting the cost of the move itself.
Flip the inputs and the answer flips. A retiree who rents, or who downsizes into a modest condo, faces almost none of that property-tax offset and keeps close to the full $2,400. Same states. Same tax code. Opposite conclusion. The variable that decides it is not the state — it is the housing footprint.
Washington State is the sharpest example of a list-based answer going wrong. It has no wage or retirement income tax, so it sits comfortably in the nine. But it levies a 7% capital gains tax on the sale of certain assets above roughly $270,000 (the 2024 threshold, inflation-indexed). A retiree who plans to liquidate a large taxable brokerage position — a concentrated stock from a career at one employer, say — could face a bill in Washington that a nominally "higher-tax" state might not impose the same way. On the raw arithmetic, a $500,000 realized gain sits about $230,000 above that threshold, and 7% of that overage is roughly $16,100 — a one-time hit that dwarfs several years of income-tax savings.
Chart: State counts as of 2025 — nine states with no broad individual income tax, roughly 41 states plus D.C. that do not tax Social Security benefits, and three income-tax states (Illinois, Mississippi, Pennsylvania) that still exempt 401(k), IRA, and pension distributions for qualifying retirees.
That middle bar is the real story. Roughly 41 states plus Washington, D.C. already leave Social Security benefits alone as of 2025, and the direction of travel is one-way: West Virginia, Missouri, and Nebraska have all recently phased out or eliminated their Social Security taxation. AARP's retiree-tax coverage tracks these phase-out timelines closely, and the pattern is unmistakable — states are competing for older residents. Which means the tax gap that would justify uprooting a life is narrowing every legislative session.
Then there is the carve-out tier almost nobody puts on a map. Illinois, Mississippi, and Pennsylvania all levy an individual income tax — and all three generally exempt distributions from 401(k)s, IRAs, and pensions for retirees meeting age and plan requirements. A retiree living primarily on qualified-plan withdrawals in Pennsylvania can face a state tax outcome functionally similar to Florida's, without leaving the Northeast. SmartAsset's retirement-tax rankings capture this by scoring total burden rather than the income-tax line alone — and that methodological choice is exactly why its rankings do not simply reproduce the nine-state list.
Worth naming a divergence in the coverage: Tax Foundation data answers a narrow policy question (does the state levy an individual income tax, yes or no), while Kiplinger and SmartAsset answer a household question (what does a retiree actually pay in total). Both are correct. They just are not the same question, and readers who take a policy answer as a household answer get burned.
Where a Careful Skeptic Pushes Back
The counter-argument deserves a fair hearing: for high-income retirees, the income-tax line genuinely can dominate. A household withdrawing $200,000 a year in a state with a 6% top rate is looking at roughly $12,000 annually — real money that property-tax offsets rarely erase. At 7% real return, $12,000 redeployed each year compounds meaningfully over a two-decade retirement. That case is strong, and it is why the wealthy-retiree migration story keeps getting written.
Our read: the flaw is not the math, it is the sample. Most retirees are not withdrawing $200,000. For a typical household, the state income-tax line is a three-figure or low-four-figure annual item — smaller than one year's difference in health insurance premiums, and far smaller than the cost of living 1,200 miles from grandchildren.
The Habit That Actually Decides This
The framework this blog keeps returning to applies cleanly here: name the goal, run the math, then build the habit that gets you there. The goal is not a zip code — it is a durable, higher after-tax withdrawal. The math is a full-burden comparison, not an income-tax comparison. And the habit is the part almost everyone skips.
Before any relocation decision, build a one-page total-burden worksheet for your current state and each candidate state. Four lines: state income tax on your actual projected withdrawals, annual property tax on the home you would actually buy or rent, estimated sales tax on your actual spending, and any one-time levies — Washington's 7% capital gains tax being the obvious trap. Update it once a year. Automate the reminder and forget it, because the underlying rules move: New Hampshire's investment-income tax vanished in 2025, and three more states have retired their Social Security levies in recent years.
Then hold the number for twelve months before acting. Relocation is the least reversible decision in personal finance, and a tax code that changes every legislative session is a poor reason to make an irreversible move. Rich is income; wealthy is having the time and proximity you actually want. A $2,400 annual tax saving does not buy back a missed grandchild's season.
Bottom line: on balance, the state-tax map is a screening tool, not a decision. The more likely outcome over the next several years is continued convergence — more states exempting Social Security and retirement distributions — which steadily shrinks the arbitrage that relocation offers. For most retirees, the higher-leverage moves remain the boring ones: withdrawal sequencing, Roth conversion timing, and controlling the housing footprint. Those work in all fifty states.
Frequently Asked Questions
Which states do not tax retirement income at all?
As of 2025, nine states levy no broad-based individual income tax, so Social Security, pensions, and 401(k)/IRA withdrawals go untaxed at the state level: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Illinois, Mississippi, and Pennsylvania do have income taxes but generally exempt 401(k), IRA, and pension distributions for retirees meeting age and plan requirements.
Do states with no income tax have higher property or sales taxes?
Frequently, yes. States that forgo income tax revenue typically recover it through property taxes, sales taxes, or other levies. That is why total tax burden — not the income-tax line alone — is the figure that determines a retiree's actual after-tax income, and why comparison tools like SmartAsset's rankings score all categories together.
Are 401(k) and IRA withdrawals taxed at the state level?
It depends entirely on the state. In the nine no-income-tax states they are not taxed at all. In Illinois, Mississippi, and Pennsylvania they are generally exempt despite those states having an income tax. Elsewhere, treatment varies widely, and federal tax applies regardless of where you live.
Is Florida actually a good state for retirees to avoid taxes?
Florida is one of the nine states with no individual income tax as of 2025, so retirement income escapes state taxation. Whether it is a good outcome for a specific household depends on the offsets — property taxes on the home purchased, insurance costs, and sales tax on actual spending. The income-tax advantage is real; it is simply not the whole ledger.
Disclaimer: This article is editorial commentary for informational purposes only and does not constitute financial, tax, or legal advice. It reflects analysis of publicly reported information rather than independent testing or personalized planning. State tax rules change frequently; consult a qualified tax professional before making a relocation decision. Research based on publicly available sources current as of August 31, 2026.