The best states to retire on Social Security in 2026 are the ones that don’t tax the benefit, keep other taxes modest, and let a fixed income go further at the grocery store and the property tax office. Florida, Tennessee, and Wyoming score well on nearly every measure. Mississippi, Alabama, and Arkansas do too, even though they collect state income tax, because their cost of living is well below the national average. With the average Social Security retirement check running about $2,071 a month in 2026, the state you cash it in can be the difference between comfort and constant math.1Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
Start With Whether Social Security Is Most of Your Income
The right state depends on what your retirement income actually looks like. A retiree living almost entirely on Social Security has different priorities than someone who also draws a pension and takes regular withdrawals from a 401(k) or IRA.
If Social Security is the bulk of your income, tax rates matter less than you’d think. Your income is already low enough that most states won’t tax the benefit, and many won’t tax you at all. What matters is what things cost: rent, groceries, utilities, and property tax on a modest home. If Social Security is one piece of a larger income picture, then state income tax policy becomes a real lever, because your pension and retirement account withdrawals are the dollars getting taxed.
Keep both filters in mind as you compare states. A place that looks perfect on the tax side can lose its advantage in the checkout line, and a state with a moderate income tax can still be the cheapest place to live once housing enters the equation.
States That Don’t Tax Social Security
Forty-two states and the District of Columbia don’t tax Social Security benefits at all as of 2026. That includes every state without an income tax and dozens of states that have an income tax but specifically exempt Social Security. West Virginia joined the exempt list in 2026, completing a phased elimination that began in 2022.2West Virginia Tax Division. Social Security Modification Kansas, Missouri, and Nebraska dropped their Social Security taxes in 2024.
Exempting Social Security is not the same as exempting all retirement income. Plenty of states leave your Social Security alone but tax 401(k) withdrawals, IRA distributions, and private pension payments at normal income tax rates. Arizona doesn’t touch Social Security but taxes private pensions above a small exemption. California exempts Social Security entirely yet taxes every other dollar of retirement income at rates up to 13.3 percent. If your income is more than the benefit itself, look at the whole tax picture, not just how Social Security is treated.
The Eight States That Still Tax Social Security
Only eight states tax Social Security income in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. Most retirees on modest incomes owe nothing in these states because of built-in exemptions or credits.
- Colorado lets residents 65 and older subtract up to $24,000 of Social Security income, and if taxable Social Security exceeds that, the full amount can be subtracted.
- Connecticut fully exempts benefits if adjusted gross income is below $75,000 for single filers or $100,000 for joint filers.
- Minnesota offers a full subtraction for single filers with AGI below roughly $84,500 and joint filers below about $108,300, with a phaseout above those levels.
- Montana taxes Social Security to the same extent the federal government does, with no additional state exemption.
- New Mexico fully exempts benefits for single filers under $100,000 and joint filers under $150,000.
- Rhode Island fully exempts benefits at full retirement age if federal AGI is below roughly $107,000 (single) or $133,750 (joint).
- Utah offers a nonrefundable credit that effectively offsets the tax for lower-income retirees, with phase-out thresholds raised in 2025 to $54,000 single and $90,000 joint.
- Vermont fully exempts benefits for single filers with AGI under $55,000 and joint filers under $70,000, with phaseouts up to $65,000 and $80,000.
Montana is the outlier: no income-based exemption, so if the federal government taxes part of your benefit, Montana will too. The tax generally bites in the other seven states only when Social Security is combined with substantial pension income, investment earnings, or large retirement account withdrawals.
No-Income-Tax States and What They Cost You Elsewhere
Eight states collect no personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.3Tax Foundation. State Individual Income Tax Rates and Brackets, 2025 New Hampshire’s tax on interest and dividends was fully repealed as of January 1, 2025.4New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect Washington belongs on the list for Social Security purposes but levies a separate tax on capital gains above $270,000.
For retirees, no income tax means 401(k) withdrawals, IRA distributions, pensions, and investment income all arrive without a state haircut. In most states with an income tax, rates typically fall between 4 and 7 percent for retirees in moderate brackets. On $50,000 of combined retirement income, that’s roughly $2,000 to $3,500 a year you’d keep.
These states still need revenue, so they find it in property and sales taxes. Texas and New Hampshire rank among the top seven states for effective property tax rates, at 1.40 percent and 1.50 percent respectively.5Tax Foundation. Property Taxes by State and County, 2026 Tennessee and Washington charge combined state and local sales tax rates above 9.5 percent.6Tax Foundation. State and Local Sales Tax Rates, 2026 A retiree buying a home in Texas could pay $4,000 to $7,000 a year in property taxes, eating into the income tax savings. Florida, Nevada, and Wyoming strike a better balance for retirees: no income tax plus property tax rates below 0.80 percent.
Sales tax deserves a closer look because it doesn’t show up on a tax return but erodes purchasing power on every trip to the store. The national average combined rate is 7.53 percent. Five states charge no statewide sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. Louisiana’s combined rate hits 10.11 percent. Most states exempt groceries and prescriptions, which softens the impact for retirees, but a few tax groceries at full or reduced rates. Retirees who spend most of their income rather than save it feel sales taxes more than working households do.
Cost of Living Is the Bigger Lever
Tax policy gets the headlines, but cost of living decides whether the check covers your life. A state with zero income tax and a cost of living 20 percent above the national average can cost more than a state with moderate taxes and cheap housing.
Using an index where 100 represents the national average, some of the most affordable states are Mississippi (87.3), Alabama (88.6), Arkansas (89.6), Iowa (89.7), and Tennessee (90.3). Hawaii, California, Massachusetts, and New York all sit well above 100.
Housing is the biggest variable. Median home prices in affordable Southern and Midwestern states can be half or a third of what you’d pay in coastal markets. For renters, the gap is just as wide. A retiree paying $800 a month for a two-bedroom apartment in a low-cost state versus $1,800 in a high-cost one saves $12,000 a year before taxes even enter the conversation. That dwarfs almost any income tax difference.
Utilities also swing more than people expect. Monthly electricity bills in 2026 average about $152 nationally, ranging from under $100 in New Mexico to over $210 in Connecticut and Hawaii. States with extreme summer heat or extreme winter cold tend to have spiky seasonal utility costs that stress a fixed-income budget.
Property Tax Relief for Seniors
Property taxes are the most unpredictable expense in retirement because they rise with local real estate values, not your income. Effective rates range from 0.29 percent in Hawaii to 1.88 percent in New Jersey and Illinois.5Tax Foundation. Property Taxes by State and County, 2026 On a $250,000 home, that’s the difference between $725 and $4,700 a year. Many states offer programs specifically for senior homeowners, and using them can matter more than the headline tax rate.
Homestead exemptions reduce the taxable value of your primary residence, shaving a fixed dollar amount off the assessed value. Circuit breaker programs provide a tax credit when your property tax bill exceeds a set percentage of household income, targeting relief at retirees who need it most. Property tax freezes lock in your assessed value or tax amount once you reach a qualifying age, typically 65. Some freezes cover the assessed value only, which still leaves you exposed to rate increases, while others freeze the total dollar amount. Read the fine print.
Tax deferral programs let qualifying seniors postpone property tax payments entirely, with the deferred amount plus interest collected when the home is sold or transferred after death. For retirees who are house-rich and cash-poor, deferral can free up hundreds of dollars a month. Eligibility for all these programs generally requires a formal application through the local assessor’s office, and deadlines vary. Missing the filing window means waiting another year for relief, so check your county’s schedule early.
A Note on Estate and Inheritance Taxes
If you plan to leave assets to heirs, the state you retire in can affect what they receive. The federal estate tax exemption for 2026 is $15 million per person, so most retirees fall well below it.7Internal Revenue Service. Estate Tax But roughly a dozen states impose their own estate taxes with much lower exemptions, sometimes starting around $1 million. Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania levy inheritance taxes based on the beneficiary’s relationship to the deceased. Spouses are almost always exempt; siblings, nieces, nephews, and unrelated heirs can face rates from 4.5 to 16 percent. Maryland is the only state with both an estate tax and an inheritance tax.
Which States Line Up Best
The states that consistently score well for Social Security retirees share a short list of features: no tax on Social Security, low or no state income tax, moderate property taxes, a cost of living below the national average, and reasonable sales tax rates.
Florida, Tennessee, and Wyoming check most of those boxes. Mississippi, Alabama, and Arkansas do too, even with income taxes on the books, because they exempt retirement income and their overall costs run below the national average. If your income is essentially just Social Security, weight cost of living heavily and worry less about tax rates. If you have a pension or substantial retirement account withdrawals coming in, the no-income-tax states start pulling ahead, provided their property and sales tax bills don’t cancel out the gain.
Two things numbers can’t answer: how close you want to be to family, and whether the healthcare providers you already trust are nearby. Those often decide the question after the tax and cost math is done.