When planning for retirement, state taxes on your 401(k), pension, and Social Security benefits should be part of your strategy.
Yet while some states offer no retirement taxes on any of these sources, a zero-percent tax rate can lose its shine if you can’t get a doctor’s appointment when you need one.
After all, an average 65-year-old retiring in 2026 can reportedly expect to spend $185,500 on healthcare and medical expenses throughout retirement. And living comfortably on a fixed income requires balancing healthcare costs with other top retiree concerns, like housing and daily living expenses.
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To help you navigate this balancing act, we cross-referenced states that don’t tax retirement income against property tax data, cost-of-living metrics, and senior healthcare rankings. The final list highlights the five most tax-friendly states for retirees, ranked by the quality and accessibility of their older-adult healthcare.
How we ranked these retirement states
Our list draws from Kiplinger’s analysis of states that do not tax retirement income. Among the 13 states meeting that baseline, we filtered for the ten with the lowest median property taxes paid on mortgage homes (using PropertyShark data referenced from the latest U.S. Census Bureau data points).
Cost-of-living data was drawn from the Missouri Economic Research and Information Center (MERIC) index, where a score of 100 represents the national average.
Then, states were ranked using the United Health Foundation’s “America’s Health Rankings Senior Report,” specifically focusing on “Clinical Care for Seniors.” This metric evaluates:
- Healthcare access: Including availability of dedicated primary care providers, home health aides, and care affordability.
- Clinical services: Including rates of routine cancer screenings, avoided care rates due to high costs, and flu and pneumonia vaccinations.
- Quality of care: Including hospice care usage, nursing home quality ratings, and preventable hospitalization stays (per Medicare beneficiaries aged 65 to 74).
Scores range around a national benchmark of 0.00. Positive scores indicate above-average healthcare performance, while negative scores reflect below-average metrics. However, it’s important to note that these scores are statewide averages and are not indicative of any one area within a specific state.
This list evaluates state income tax only. Federal income taxes still apply. Consult with a qualified tax professional when necessary.
1. Washington: Outstanding healthcare, higher cost of living
(Image credit: Getty Images)
Senior healthcare ranking: +0.528 (Top 10 nationwide)
Median property taxes paid: $4,556
Cost-of-living score: 114.6 (14.6% above national average)
Washington takes the top spot on our list. The Evergreen State exempts all retirement income from state tax, meaning your Social Security, pensions, 401(k)s, and IRAs remain untouched by local authorities.
Another retiree benefit is its healthcare system. With a score of +0.528, per the Clinical Care report, Washington’s medical care for older adults is above average, placing it in the top 20% of all states nationwide, just behind Colorado.
Yet everyday affordability remains an issue.
- Washington’s median annual property tax bill exceeds $4,500, and overall living expenses — like groceries and housing costs — run roughly 14.6% higher than the national average.
- Plus, Washington recently approved an increased capital gains tax structure ranging from 7% to 9.9% on certain high-value investments, which can make the state more expensive for higher-wealth individuals.
But if you’re retired and can comfortably afford the often higher price tag of Pacific Northwest living, Washington delivers an ideal combination of state retirement tax income exemptions and top-tier healthcare.
Related: 10 Cheapest Places to Live in Washington
2. Pennsylvania: Strong healthcare and moderate living costs
(Image credit: Getty Images)
Senior healthcare ranking: +0.320 (#16 nationwide)
Median property taxes paid: $3,311
Cost-of-living score: 96.2 (3.8% below national average)
Pennsylvania slides into second on our list. The Keystone State exempts retirement income from state tax, including Social Security, pension payouts, and 401(k) or IRA distributions.
Senior healthcare access also remains strong here. With a score of +0.320, older adults may expect high-quality medical care, placing the state in the top 32% nationwide, according to data from the United Health Foundation. Plus, the average cost of living sits nearly 4% below the national average.
- But while retirement income is exempt from state taxes, all other income sources (like interest and dividends) are subject to a flat 3.07% state income tax.
- Additionally, the median property tax bill, while lower than Washington, remains 11% above the national average according to data from PropertyShark.
For retirees, Pennsylvania may offer a more balanced financial profile than higher-tax northeastern neighbors, like New York. However, elevated property tax bills can be difficult on a fixed income.
3. Iowa: Affordable living with above-average care
(Image credit: Getty Images)
Senior healthcare ranking: +0.185 (#21 nationwide)
Median property taxes paid: $2,897
Cost-of-living score: 88.6 (11.4% below national average)
Iowa may be a true hidden gem for budget-conscious retirees. The state exempts retirement income from state taxes for residents aged 55 and older, meaning you don’t have to wait long before you get state income tax relief.
On top of that tax exemption, Iowa boasts the lowest property tax bill among our top three states on this list, at just under $2,900. This is right below the national average, according to the U.S. Census Bureau, and the savings don’t stop there. The Hawkeye State’s cost of living is more than 11% below the national average, according to MERIC.
And perhaps more importantly, low cost doesn’t automatically mean low healthcare quality, either. Iowa’s senior healthcare ranking sits in the top 42% of the nation (ranking 21st overall in the Clinical Care United Health report), supported by lower rates of preventable hospitalizations.
- While Iowa ranks high nationally for average senior clinical care, its rural geography can create more care disparities for some areas than in, say, Washington or Pennsylvania.
- Plus, if you’re used to a top #20 state for prime medical care, Iowa falls just short of that in the Clinical Care report.
Yet for fixed-income retirees seeking a balance of affordability and dependable healthcare (at least in more urban areas), Iowa may be considered a standout choice among tax-friendly states.
4. Florida: Low taxes, but rising costs and healthcare strain
(Image credit: Getty Images)
Senior healthcare ranking: -0.103 (#31 nationwide)
Median property taxes paid: $2,730
Cost-of-living score: 100.7 (0.7% above national average)
Florida remains a classic choice for retirement because it levies no state income tax at all, protecting not just retirement distributions but also interest and dividends (and who doesn’t love the weather?).
However, the Sunshine State’s significant influx of retirees in recent years has created new friction points.
- Rapid population growth stretches the doctor-to-patient ratio, lowering Florida’s senior healthcare access score to slightly below the national benchmark, according to the United Health Foundation.
- Additionally, rising housing expenses and skyrocketing home insurance rates have pushed Florida’s overall cost of living slightly above the national average, according to MERIC.
So while Florida remains viable, a 2026 retirement plan in the Sunshine State might mean preparing for higher everyday expenses and longer waits for medical specialists than in previous decades.
Related: 10 Cheapest Places to Live in Florida
5. South Dakota: Maximum tax relief, lower healthcare access
(Image credit: Getty Images)
Senior healthcare ranking: -0.263 (#35 nationwide)
Median property taxes paid: $2,724
Cost-of-living score: 94.1 (5.9% below national average)
Like Florida, South Dakota levies no state income tax on personal income (though its cold weather stands in sharp contrast to the Sunshine State).
South Dakota also has the lowest median property tax bill on this list, per U.S. Census Bureau data, and a cost of living roughly 6% below the national average.
One drawback for seniors requiring medical care in the Mount Rushmore State is medical availability, per the Clinical Care report.
- South Dakota ranks 35th in older adult clinical care, with a score below the national average.
- Rural geography and fewer medical centers mean accessing specialized care can require travel.
But if your primary goal in retirement is stretching your dollars as far as possible and you are comfortable with traveling for specialty care, South Dakota may offer your retirement nest egg significant financial benefits.