Are you researching the best states to retire? Thinking about where to live in retirement can feel exciting—and overwhelming.
Warm weather? Lower taxes? Better healthcare? Closer to family? There’s a lot to weigh, and the differences from state to state in the U.S. are surprisingly dramatic.
According to the U.S. Census Bureau, nearly one million Americans aged 60+ moved across state lines in 2023. Some chased sunshine, others sought affordability, and many simply wanted a calmer, more comfortable lifestyle.
But here’s what often gets overlooked:
Choosing the “wrong” state can cost you tens or even hundreds of thousands of dollars over your retirement.
Not because of one big issue, but because of the combined impact of state taxes, healthcare quality, insurance costs, and everyday living expenses.
In this post, I’ll walk you through three key areas to help you make a confident decision:
1. Five state taxes retirees often overlook
2. Highlights from the 2025 “Best and Worst States to Retire” rankings
3. A simple checklist to help you compare states with your own priorities
Let’s start with something that can make or break retirement finances: state taxes.
1. How Taxes Shape the Best States to Retire – Five State Taxes you cannot ignore
Most retirees focus on income taxes—but that’s only one piece of the puzzle. Depending on where you live, you could also face higher sales taxes, property taxes, or even estate and inheritance taxes.
Here are the five you’ll want on your radar:
1. State Income Tax
Nine states—like Florida, Texas, Washington, Nevada, South Dakota, Wyoming, Tennessee, New Hampshire, Alaska —have no state income tax. On the other hand, states such as California or New York can add double-digit rates on top of tax bracket.
Good news: Social Security benefits are not taxed in most states.
2. Sales Tax
Sales tax varies widely.
Louisiana, Tennessee, and Arkansas have combined rates above 9–10%, while five states, Alaska, Delaware, Montana, Oregon, New Hampshire , charge zero at the state level.
This impacts your wallet every single day.
3. Property Tax
This is a big one for homeowners.
New Jersey and Illinois have some of the highest property taxes in the country, while Hawaii and Alabama sit on the low end.
Lower taxes can free up your budget—but extremely low rates sometimes reflect weaker local services, so balance matters.
4. State Estate Tax
Federal estate tax applies to only the very wealthy.
But 13 states have their own estate taxes with much lower exemption amounts—sometimes around $1–2 million. States with Estate taxes are Connecticut, Hawaii, Illinois, Main, Maryland, DC, Minnesota, New York, Massachusetts, Oregon, Rhode Island, Vermont, Washington.
That can affect far more middle-class families than people realize.
5. State Inheritance Tax
Only 5 states, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania, Rhode Island, charge this tax, but when they do, the recipient pays—sometimes even on modest inheritances, depending on the family relationship.
2. So… Which States Rank Best (and Worst) for Retirees in 2025?
Every year, major research groups—like Bankrate and WalletHub—publish rankings that evaluate far more than taxes: healthcare quality, weather, crime, affordability, and access to senior services. Interestingly, their 2025 rankings differ, but a few patterns stand out.
⭐ Top States (According to 2025 Research)
Bankrate #1: New Hampshire
No income tax, no sales tax, excellent safety and healthcare. Higher cost of living, but strong overall score.
WalletHub #1: Florida
Sunny weather and no state income tax. Insurance costs and natural-disaster risks keep it out of Bankrate’s top five, but retirees continue to love it.
⚠️ States That Landed Near the Bottom
Texas: Worst #2 in Bankrate
Even with no income tax, the combination of weaker healthcare, higher living costs in many cities, and limited senior services pushed it into the “worst” category in Bankrate’s list.
Washington State: Worst #4 in WalletHub
Good healthcare and quality of life—but very high costs pulled it down.
And one personal note:
I lived in Arizona for many years and have seen countless retirees happily settle here. While it didn’t rank highly this year due to rising costs and mixed healthcare access, it remains a genuinely wonderful place to live—especially if you love sunshine.
3. How to Choose the Right State For You
There is no “best” state for everyone. Your perfect fit depends on what matters most—budget, climate, access to healthcare, family, outdoor activities, or simply lifestyle preference.
Here’s a simple checklist to help you compare states side by side:
Total tax burden (income, sales, property, estate, inheritance)
Cost of living and housing affordability
Healthcare quality and availability
Climate and weather risks
Access to senior services and community resources
Crime and safety
Proximity to family or support network
Lifestyle fit (outdoors, culture, pace of life)
A thoughtful comparison now can lead you to a retirement that feels comfortable, fulfilling, and financially secure.
Final Thoughts
Choosing where to retire is a big decision—but the more you understand the financial and lifestyle differences between states, the easier it becomes.
I hope this guide helps you explore your options with more clarity and confidence.
If there’s a state you’re considering—or if you’ve recently moved—I’d love to hear about your experience. Your insights may help someone else in the same position.
Feel free to share your thoughts or questions in the comments!