9 U.S. Cities Where Retirees Won't Owe State Income Tax

There are nine states that do not levy a personal income tax, which means seniors do not pay state tax on Social Security benefits. Still, a zero on the income-tax line does not tell the full story for retirees considering a relocation. Property taxes, sales taxes, insurance costs, and day-to-day expenses can differ sharply from one no-tax state to another, often offsetting some of the savings.

Editor's note: Median gross rents are City-Data's figures. Average home values come from Zillow data. Cost of living figures come from Sperling's BestPlaces.

Sioux Falls, South Dakota

Median rent: $1,105

Average home value: $330,625

The Big Sioux River drops over pink quartzite in the center of town, and a long paved greenway follows the water through parks and trails. A university and several other colleges add a youthful feel to this otherwise traditional mid-sized Midwest city.

South Dakota is one of the states with no income tax, and it does not tax Social Security benefits. Several regional health systems operate hospitals and clinics nearby, giving residents access to both primary and specialty care.

Amarillo, Texas

Median rent: $1,123

Average home value: $209,627

Set on the flat High Plains, Amarillo has a creek running through town and a striking canyon landmark to the south. A two-year college in the city and a university in the surrounding area keep the campus atmosphere alive, while an art museum and performing-arts venues give retirees more cultural options than many small plains cities.

Texas has no state income tax, and Social Security benefits are not taxed. A regional hospital system serves both the city and nearby communities. Cost of living is 73.6, about 26.4% below the national average.

Chattanooga, Tennessee

Median rent: $1,396

Average home value: $314,999

Parks and trails line the Tennessee River, with Lookout Mountain rising nearby as a scenic backdrop. Local campuses keep the streets active, and the mix of water and hills means outdoor recreation is never far away.

Tennessee does not have a state income tax and does not tax Social Security benefits. A regional hospital system provides general medical care for the area. Cost of living is 89.7, or roughly 10.3% below the national average.

Spokane, Washington

Median rent: $1,341

Average home value: $392,803

The Spokane River cuts through downtown, where a large urban park wraps around Upper Spokane Falls, a waterfall visible from the city center. Multiple colleges maintain a steady student presence, and lakes, ski resorts, mountains, and bike trails are all within reach for retirees who want scenery close to home.

Washington has no state income tax, and Social Security is not taxed. A regional health system with several locations offers emergency, surgical, and specialty care. Cost of living is 103.1, about 3.1% above the national average.

Ocala, Florida

Median rent: $1,628

Average home value: $263,895

Horse farms cover thousands of acres of pasture just outside town, and the surrounding countryside is strongly shaped by equestrian culture. A college in the city adds campus energy, while natural springs, a well-known spring-fed river, and a national forest are all within easy driving distance for those who want access to woods and water.

Florida has no state income tax and does not tax Social Security benefits. A regional hospital system serves residents, with specialty and equine medical care nearby. Cost of living is 87, about 13.0% below the national average and 15.6% below the Florida average.

Sparks, Nevada

Median rent: $1,781

Average home value: $534,404

Waterfront parks and paved trails follow the Truckee River through Sparks, with foothills and mountains framing the valley. Walking, biking, and fishing are part of daily life in a region tied to the outdoor recreation opportunities of the nearby Sierra Nevada.

Nevada has no state income tax, and Social Security benefits are not taxed. An acute-care hospital serves the city, with additional regional hospitals and health systems in the nearby Reno area. Cost of living is 118.6, about 18.6% above the national average.

Anchorage, Alaska

Median rent: $1,536

Average home value: $422,584

Waterfront parks and trails trace Cook Inlet, while the Chugach Mountains rise along the city's eastern edge. A local university adds campus energy to a setting that combines everyday urban convenience with dramatic scenery in every direction.

Alaska has no state income tax and does not tax Social Security benefits. Regional hospitals and a health system serve the Anchorage area. Cost of living is 115.5, about 15.5% above the national average.

Laredo, Texas

Median rent: $1,062

Average home value: $216,721

Laredo sits on the north bank of the Rio Grande, directly across from Nuevo Laredo, Mexico, with a walkable historic downtown just blocks from the water. Its bicultural, binational heritage shapes everyday life, and the presence of a local college and university adds a campus feel.

Texas has no state income tax, and Social Security benefits are not taxed at the state level. A regional hospital system handles inpatient, emergency, and specialty care. Cost of living is 82.2, about 17.8% below the national average and 12.7% below the Texas average.

Johnson City, Tennessee

Median rent: $1,107

Average home value: $282,215

Waterfront parks and trails follow the Watauga River and Boone Lake, and the city sits in the Blue Ridge Mountains near the Cherokee National Forest, keeping hiking and other outdoor recreation close at hand. A university campus also brings a steady student presence to town.

Tennessee does not charge a state individual income tax and does not tax Social Security benefits. A regional medical center and health system support both routine and specialty care. Cost of living is 84.6, about 15.4% below the national average.

Bottom line

Avoiding state income tax can go a long way toward stretching a retirement budget, but it is only one part of the calculation. Property taxes, sales taxes, home insurance, and everyday expenses vary widely across no-tax states, and a higher cost of living can quietly reduce the savings.

Before relocating, compare your full tax burden and typical living costs with what you pay now rather than focusing only on income tax. Doing so can help prevent unwelcome surprises in retirement. The best no-tax city will depend just as much on climate, scenery, and lifestyle as on the tax code.

This article is for informational purposes only and should not be considered investment advice.

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