What Retiring in Red and Blue States Really Costs in 2025
Written by
Kerra Bolton
Edited by
Zuri Anderson
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The cost of retirement in 2025 isn’t the same everywhere.
According to analysts at the Berkeley Economy & Society Initiative, living in a blue state can run 13% higher than in a red state once housing, taxes, healthcare, and everyday expenses are factored in.
For a retiree living on $60,000 a year, that’s roughly $650 more per month. While blue states often deliver stronger public services and amenities, the extra expense can make or break a retirement budget. Here’s what retiring in a red or blue state really cost in 2025.
Blue States Cost More Overall
Housing and utilities account for much of the difference. Stricter regulations and higher energy rates in blue states drive up costs, while red states typically offer more affordable property and lower utility bills.
“The true retirement risk is assuming the tax code will treat you gently where you grew up,” Chad Cummings, an attorney and certified public accountant (CPA), said. “Many retirees stay in high-tax states out of familiarity and nostalgia, unaware they are subsidizing Medicaid shortfalls and underfunded pensions through hidden levies.”
He added, “Moving to Florida or Texas is not political. It is simple math.”
State Income Taxes
Retirees in 2025 face dramatically different outcomes depending on where they live. States like California still levy some of the nation’s highest taxes on retirement income, while places such as Florida and Texas impose none at all.
For example, a retiree drawing $120,000 annually from an IRA in Los Angeles would lose over $12,000 per year to California’s state income, whereas in Florida or Texas, they wouldn’t pay any income tax.
“Over 20 years, that tax drag exceeds $240,000,” Cummings said. “Even for a modest $60,000 pension, the difference is over $120,000. That’s enough to fund eight to 10 years of assisted living or two decades of Medicare Part D premiums.”
Everyday Expenses Push Budgets Higher
In 2025, everyday prices continue to split sharply along state lines.
Federal data from the Bureau of Economic Analysis show overall price levels are highest in blue states such as California (index 112.6), New Jersey (108.9) and Hawaii (108.6), while red states like Arkansas (86.5) and Mississippi (87.3) remain far cheaper.
Utilities illustrate the gap. In July 2025, California residents paid an average of 32.58 cents per kilowatt-hour, compared with 15.36 cents in Texas and 15.12 cents in Florida; New York averaged 26.18 cents, according to the U.S. Energy Information Administration.
Gasoline prices tell a similar story. According to AAA data in September 2025, a gallon of regular gas cost $4.65 in California, but just $2.74 in Texas, $3.02 in Florida and $3.22 in New York.
These everyday differences, in electricity, fuel and groceries, compound over time, leaving retirees in blue states with far less discretionary income than their peers in red states.
Property Taxes
Property tax rules in 2025 highlight another sharp divide between red and blue states. Red states often cap assessments or grant exemptions, while blue states can leave retirees with heavy annual bills.
“A retiree who bought in 2004 for $300,000 may now owe property tax on a $400,000 valuation, even if the market value is $800,000,” Cummings said. “Texas offers a $100,000 homestead exemption for seniors in some school districts. In contrast, retirees in Illinois or New Jersey routinely face $15,000 annual property tax bills with no meaningful cap or exemption.”
Estate Taxes
In 2025, estate and inheritance taxes remain a hidden cost for retirees in certain blue states.
Cummings said that New York and Oregon can quietly claim hundreds of thousands of dollars from even moderate estates, while Texas and Florida impose no such levy.
For example, Cummings said an estate worth $3 million, common for dual-income professionals with a paid-off home and retirement accounts, would face roughly $285,000 in Oregon estate tax. In New York, the same estate could owe more than $300,000.
“These taxes apply on top of the federal estate tax and are assessed even when the bulk of the estate passes to children,” he said.
Final Takeaway
Retiring in a blue state in 2025 typically costs about 13% more than in a red state. That’s roughly $650 extra each month on a $60,000 budget. Layer on higher income, property, estate taxes, and the long-term price tag can reach hundreds of thousands of dollars. For retirees, choosing where to live isn’t just about lifestyle; it’s one of the biggest financial decisions they’ll make.
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