Oct 20, 2023
With a frigid winter approaching, retiring somewhere warm probably sounds good right about now.
But for many folks on the cusp of retirement, it’s not just cold climates that can tarnish your golden years. There’s also taxes.
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If you’re looking to retire to a place that’s not only warm but also keeps thirsty governments away from your hard-earned, post-career assets, you have options. Some U.S. states even have a golden combination of temperate climates, no income taxes, no pension taxes, and no taxes on distributions from retirement plans — regardless of your age or wealth.
However, it’s important to remember that state taxation is part of a larger income puzzle: You can’t escape federal taxes or, in most places, property or local taxes that support schools, infrastructure and first responders.
That being said, here’s a sampling of where your money will go the farthest while you stay the warmest.
Florida
Let’s get the obvious choice out of the way: The Sunshine State is very hospitable to retirees and their money. The state famously lacks a state income tax, which means you won’t pay any tax on your pension.
Assuming you can stomach the state’s real estate costs and the occasional hurricane, your 401(k) and IRA distributions will go further since Florida doesn’t tax distributions from those plans. And Social Security? No taxes on that, either.
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Nevada
Retiring to the Silver State is a safe bet, since Nevada is another state that doesn’t have income tax, which like Florida means no taxes on pensions, retirement plan distributions or Social Security.
Nevada is home to many of the nation’s top retirement destination towns, with the suburbs outside of Las Vegas offering the tempting combination of warmer temperatures in winter and access to casinos and other entertainment year-round.
Texas
Though recent winter conditions have proven more challenging, you can generally expect to stay warm in the Lone Star State. The tax breaks will warm your heart, too.
Texas doesn’t tax state income. Nor does it tax Social Security, pension income or distributions from retirement plans. Those factors, combined with a general lower cost of living and comparatively lower real estate costs, make Texas an attractive landing spot.
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But government money lost to those tax breaks has to come from somewhere, which explains why the state has some of the nation’s highest property tax rates.
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Tennessee
If it's good enough for Dolly Parton, why not you too?
There's no income tax in this state, which means residents of Tennessee don't pay taxes on their pensions, 401(k)s, IRAs or Social Security benefits. The state also boasts a low cost of living, included low property taxes.
And if you're looking for company in your golden years, Tennessee is also home to a number of retirement communities, which it promotes through the Tennessee Department of Tourist Development.
Bonus: Hawaii
What about that other idyllic landing spot, Hawaii?
Unfortunately, Hawaii doesn't quite make the cut: while Social Security income isn’t taxed in the state, private pensions and retirement plan distributions are.
Of course, there’s a good chance that if you’re even considering Hawaii — with its high cost of living and soaring real estate valuations — you’ve probably determined that you can survive those levies.
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Chris Clark is a Kansas City–based freelance journalist covering personal finance, housing and retirement. A former Associated Press editor and reporter, he writes plainspoken stories that help readers make smarter financial decisions.
