10 States With Low Taxes and 10 Low-Cost-of-Living States Retirees Should Target

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There is a slew of parameters to consider for retirees who desire to relocate. Of course, the weather and lifestyle can be of importance, but some other criteria can also affect their financial well-being, such as taxes and cost of living.

First, when it comes to Social Security and taxes, not all states are equal and how far your benefits will go depends on where you live. Considering that a whopping 58% of retirees consider Social Security as a major source of income, according to a Gallup survey, the amount that will go to taxes can make a huge difference.

In 2025, however, the list of states that will not tax Social Security benefits will increase, as only nine states will continue to do so.

Now, while the tax factor in general is key in determining in which state your dollar and benefits will stretch further in retirement, another factor to consider is cost of living. Yet, not all the states that are tax-friendly when it comes to Social Security benefits taxes are as equally friendly when it comes to costs of living. Because of this, GOBankingRates lists out below the top 10 states ranked by income taxes, followed by the top 10 states ranked by cost of living.

“For retirees who want to relocate, the cost of living is probably the most important factor,” said Thomas Savidge, research fellow at the American Institute for Economic Research (AIER), adding that tax policy plays a huge role in the cost of living as well.

In turn, moving to a state with low-income taxes (or no income tax) means retirees get to keep their hard-earned retirement savings, he added.  

Yet, for instance, a state such as West Virginia has the lowest cost of living according to a GOBankingRates survey — yet, it also carries  moderately higher state income taxes. Similarly, Connecticut, which has one of the lowest property tax rates in the country, has a high cost of living. That’s why picking a state to relocate that makes sense financially for retirees can be a challenging balancing act.

Here are some of the states that offer the best of both worlds for retirees who are looking to relocate — ranked by low taxes and cost of living, respectively.

Top 10 States Ranked by Income Taxes

Tennessee

• Annual cost of living: $43,230
• State tax on Social Security: none
• Effective property tax: 0.70%
• Income tax rate: no state income taxes

Texas

• Annual cost of living: $43,379
• State tax on Social Security: none
• Effective property tax: 1.74%
• Income tax rate: no state income taxes

South Dakota

• Annual cost of living: $43,556
• State tax on Social Security: none
• Effective property tax: 1.24%
• Income tax rate: no state income taxes

Wyoming

• Annual cost of living: $46,170
• State tax on Social Security: none
• Effective property tax: 0.61%
• Income tax rate: no state income taxes

Florida

• Annual cost of living: $52,239
• State tax on Social Security: none
• Effective property tax: 0.86%
• Income tax rate: no state income taxes

Nevada

• Annual cost of living: $55,212
• State tax on Social Security: none
• Effective property tax: 0.55%
• Income tax rate: no state income taxes

North Dakota

• Annual cost of living: $40,951
• State tax on Social Security: none
• Effective property tax: 1%
• Income tax rate: 1.95% to 2.50%

Arizona

• Annual cost of living: $53,483
• State tax on Social Security: none
• Effective property tax: 0.62%
• Income tax rate: 2.50%

Indiana

• Annual cost of living: $38,633
• State tax on Social Security: none
• Effective property tax: 0.83%
• Income tax rate: flat 3.05%

Pennsylvania

• Annual cost of living: $41,048
• State tax on Social Security: none
• Effective property tax: 1.53%
• Income tax rate: flat 3.07%

Top 10 States Ranked by Cost of Living

West Virginia

• Annual cost of living: $33,649
• State tax on Social Security: will end in 2026, according to AARP
• Effective property tax: 0.59%
• Income tax rate: 2.36% to 5.12 %

Mississippi

• Annual cost of living: $34,042
• State tax on Social Security: none
• Effective property tax: 0.79%
• Income tax rate: Flat 4.70%

Arkansas

• Annual cost of living: $34,989
• State tax on Social Security: none
• Effective property tax: 0.62%
• Income tax rate: 2% to 4.4%

Louisiana

• Annual cost of living: $35,027
• State tax on Social Security: none
• Effective property tax: 0.56%
• Income tax rate: 1.85% to 4.25%

Oklahoma

• Annual cost of living: $35,848
• State tax on Social Security: none
• Effective property tax: 0.90%
• Income tax rate: 0.25% to 4.75%

Alabama

• Annual cost of living: $36,894
• State tax on Social Security: none
• Effective property tax: 0.41%
• Income tax rate: 2% to 5%

Iowa

• Annual cost of living: $37,442
• State tax on Social Security: none
• Effective property tax: 1.57%
• Income tax rate: 4.40% to 5.70%

Missouri

• Annual cost of living: $38,348
• State tax on Social Security: none
• Effective property tax: 0.98%
• Income tax rate: 2%% to 4.8%

Ohio

• Annual cost of living: $38,413
• State tax on Social Security: none
• Effective property tax: 1.53%
• Income tax rate: 2.75% to 3.5%

Indiana

• Annual cost of living: $38,633
• State tax on Social Security: none
• Effective property tax: 0.83%
• Income tax rate: flat 3.05%

^{Cost of living data is from a GOBankingRates survey, Social Security state tax data is according to SmartAsset and income tax rates are from The Tax Foundation, unless otherwise stated.}

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