States classified as tax-friendly by SmartAsset do not tax Social Security income and offer an additional deduction on some or all forms of retirement income. These 18 tax-friendly states also have relatively friendly sales, property, estate, inheritance and income tax rates.

In Alabama, Social Security retirement benefits are fully exempt from income taxes. Public and private pension income is not taxed either. But don’t blow the confetti cannons yet, withdrawals from retirement accounts are fully taxed.

Social Security income is not taxed and public and private pension income are only partially taxed in Arkansas. While property taxes in the Natural State are among the lowest in the country, sales taxes are high.

Colorado income tax law allows for a large deduction on all retirement income. Social Security income, withdrawals from retirement accounts and public and private pension income are all partially taxed. But if retiring in Colorado stay clear of Fraser, one of the coldest cities in the world.

One of the best states to work from home, Delaware is also tax-friendly to retirees. While the state does not tax Social Security income, withdrawals from retirement accounts and public and private pensions are partially taxed. However, Delaware is one of five states with no sales tax at the state level.

While Social Security retirement benefits are not taxed at the state level in Idaho, other forms of retirement income from 401(k)s or IRAs are taxed at rates ranging from 1.125% to 6.925%. Idaho gains bonus points as one of the happiest states in the U.S.

In Illinois, just about all retirement income is exempt from taxation. Social Security retirement benefits, pension income and income from retirement savings accounts are all untaxed. While property and sales taxes are among the country’s highest, the state’s biggest city, Chicago, is one of the safest cities in the world.

Social Security income is exempt from taxation in Kentucky, and the state provides a deduction for any senior receiving other forms of retirement income. Accordingly, withdrawals from retirement accounts and public and private pension income are all partially taxed.

While public pensions in Louisiana are not taxed, private pensions are partially taxed. Social Security retirement benefits are exempt from taxation but retirees will pay taxes on income from retirement savings accounts.

Known for some of America’s best lake towns, Michigan does not tax Social Security retirement benefits and provides a deduction for other sorts of retirement income including withdrawals from retirement accounts, public pension income and private pension income.

Among the states with the lowest income taxes, New Hampshire does not tax salaries or wages. However, retirees with some investment income should know the state does have a 5% tax on dividends and interest.

Social Security retirement benefits are fully exempt in Oklahoma, and a $10,000 deduction toward other retirement income types like from a pension or 401(k) are also provided by the state. 

In Pennsylvania, Social Security income, payments from 401(k)s and IRAs are all fully exempt from taxation. For seniors 60 or older, pension income is also exempt. Fun fact: Pennsylvania is among the states that spend the most money on weddings.

Social Security retirement benefits are not taxed in South Carolina. Seniors who receive other sorts of retirement income qualify for a $15,000 deduction. There’s more to South Carolina than Charleston and Myrtle Beach — try Greenville, one of America’s most underrated cities.

At the state level, Tennessee does not tax Social Security income, withdrawals from retirement accounts, or public or private pension income. The state’s property tax rates are relatively low, but the sales taxes are very high. So expect to pay a hefty tax on your Nashville hot chicken, the state’s most iconic food.

Texas has no state income tax, so Social Security retirement benefits and other types of retirement income are tax free at the state level. However, the state has some of the highest sales and property taxes in the U.S. Texas is also one of the states with the highest percentage of households with six-figure incomes.

While Social Security retirement benefits are not taxed in Virginia, other forms of retirement income — like pensions and retirement account withdrawals — are deductible up to $12,000 for seniors. Virginia has low property and sales tax rates and plenty of caring neighbors in America’s most caring city, Virginia Beach.

Like Texas, Washington has no state income tax, so Social Security retirement benefits and other types of retirement income are tax free at the state level. On the other hand, sales taxes are relatively high and property taxes are nearly average. Home values in several cities in Washington are expected to be among the best in the U.S. after the coronavirus pandemic.

In West Virginia, Social Security retirement income, withdrawals from retirement accounts, and public and private pensions are all partially taxed. However, seniors can claim a deduction to offset the taxes.

To count as a very tax-friendly state for retirees, states must either have no state income tax, no tax on retirement income or a significant tax deduction on retirement income. These seven qualifying states have friendly sales, property, estate and inheritance tax rates too.

Alaska has no state income tax and does not tax Social Security retirement benefits or pension payments. There is also no state sales tax, estate or inheritance tax in Alaska. Plus, Fairbanks makes is among the most relaxing retirement destinations.

Home to some of the priciest retirement communities in America, Florida has no estate, inheritance or state income tax. Social Security retirement benefits, pension income and income from IRAs or 401(k)s are all untaxed.

In Georgia, Social Security retirement benefits are not taxed and the state provides a maximum deduction of $65,000 per person on all types of retirement income for anyone 65 or older. Georgia also has no inheritance or estate tax.

All forms of retirement income are exempt from taxation in Mississippi, including Social Security benefits, any pension income and income from an IRA or 401(k). Property taxes are low and sales taxes are also moderate.

One of the states with the highest bankruptcy rates, Nevada has no state income tax. At the state level, all retirement income is tax free. Although the state’s property taxes are relatively low, the state sales tax is higher than average.

Another state with no state income tax, South Dakota does not tax Social Security, pensions or other forms of retirement income. Not just a great state to retire in, South Dakota is also one of the best places to raise a family.

The last of the very tax-friendly states, Wyoming does not have a state income tax. All forms of retirement income are not taxed in the state. Property and sales taxes in Wyoming are among the lowest in the U.S. It also doesn’t hurt that the state is home to several of the most beautiful spots in America’s national parks.

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