23 Most Affordable States for Retirees, Ranked

The financial benefits of these states can help retirees stretch their money.

Some people choose to stay where they are when they retire. Others relocate for a variety of reasons. Perhaps a dream location inspires a move, or it’s because of the availability of certain activities, or even the climate.

Since retiring generally means a reduction in income, most people also have to consider what this will cost. Some states are more retiree friendly when it comes to taxes and the affordability of resources for seniors. You have to consider various criteria.

These are the most affordable states to retire to, based on the adjusted cost of living, tax friendliness and the cost of care services.

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23. Indiana

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,640

Average monthly nursing home cost (for a semi-private room): $7,270

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The details: Indiana’s income tax is a modest, flat rate of 3.23 percent and real estate taxes are middle of the road at 0.87 percent. The state allows some exemptions for retirement income, for military pensions and civil service annuities. Railroad Retirement benefits are exempt. Homeowners 65 and up may be eligible for a reduction in property taxes, depending on income.

Note: The affordability rankings come from a 2022 WalletHub report. The adult day care and nursing home costs are from SeniorLiving.org.

22. South Dakota

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,560

Average monthly nursing home cost (for a semi-private room): $7,118

The details: When it comes to taxes, South Dakota ranks in the middle, with state and local sales taxes at 6.4 percent and an effective property tax rate of 1.32 percent. These taxes are offset by the fact that there is no state income tax. Those 65 and older who meet requirements are eligible for a property tax freeze or reduction. A tax homestead exemption delays payment of property taxes for eligible taxpayers 70 and older until the property is sold.

21. Oklahoma

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,440

Average monthly nursing home cost (for a semi-private room): $5,475

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The details: Oklahoma has the third-lowest adjusted cost of living in the country. It ranks No. 24 in the nation with an effective 0.9 percent property tax; the state income tax tops out at 5 percent. Social Security and Civil Service Retirement System benefits are not taxed and up to $10,000 per person of other retirement income may be excluded. Depending on income, seniors may be eligible for a property tax refund or a valuation freeze on their home.

20. Missouri

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Are Social Security benefits taxed? They may be taxed

Median monthly adult day care cost: $1,700

Average monthly nursing home cost (for a semi-private room): $5,262

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The details: Missouri’s average nursing home cost is the third lowest in the nation. The state does tax Social Security benefits for individuals with an adjusted gross income of $85,000 or more (for married couples that number is $100,000). Depending on income levels, some taxpayers may be eligible for a private pension exemption. Military pensions are not taxed. Certain senior citizens receive a credit on property taxes or rent paid.

19. Utah

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Are Social Security benefits taxed? Yes

Median monthly adult day care cost: $1,840

Average monthly nursing home cost (for a semi-private room): $7,178

The details: Utah has a flat income tax rate of 4.95 percent as well as a low property tax rate of 0.66 percent. State and local sales tax is 6.77 percent. Residents with Social Security and IRA income may be able to claim a retirement-income tax credit, depending on income. Homeowners and renters 66 and up may be eligible for a “circuit breaker” tax credit, dependent on income.

18. Wyoming

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $3,100

Average monthly nursing home cost (for a semi-private room): $6,966

The details: Wyoming has the fifth-lowest adjusted cost of living. State sales tax is only 4 percent and property taxes, at 0.61 percent, are also among the lowest in the nation. There is no state income tax. Those 65 and older who meet income requirements may receive a refund on property tax, utilities and sales/use tax.

17. West Virginia

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Are Social Security benefits taxed? They may be taxed

Median monthly adult day care cost: $2,140

Average monthly nursing home cost (for a semi-private room): $11,619

The details: West Virginia‘s average nursing home cost is on the higher side, but the state has the second-lowest annual cost of in-home services in the nation. That, combined with a 0.59 percent property tax, enables more residents to stay in their homes. The state income tax rate ranges from 3 to 6.5 percent and those 65 and older may exclude the first $8,000 of retirement income. The homestead program allows for a $20,000 exemption on property for those 65 and older. Other credits are also available based on income.

16. Arkansas

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,740

Average monthly nursing home cost (for a semi-private room): $6,083

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The details: Arkansas has the lowest adjusted cost of living in the U.S. and among the lowest property taxes at 0.63 percent. In-home services are the fifth lowest and for those 65 and up, property taxes on homes can be frozen. Retirement plans up to $6,000 and all Railroad Retirement benefits are exempt from state taxes.

15. Arizona

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,760

Average monthly nursing home cost (for a semi-private room): $6,540

Renters insurance offer: On Lemonade

The details: Arizona’s warm weather attracts retirees in droves, not to mention the hundreds of retirement communities that make this state feel like a party town for anyone over the age of 55. Plus, Social Security benefits as well as up to $2,500 of income from federal and Arizona government retirement plans are exempt from state income taxes.

14. Montana

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Are Social Security benefits taxed? They may be taxed

Median monthly adult day care cost: $2,020

Average monthly nursing home cost (for a semi-private room): $7,574

The details: Even though Social Security is taxable in this state, there is a deduction for single taxpayers with an adjusted gross income of less than $25,000 ($32,000 for joint filers). However, lawmakers are trying to change this, creating bills that would eliminate Social Security as taxable income. Only time will tell if this happens.

13. Idaho

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $2,180

Average monthly nursing home cost (for a semi-private room): $8,517

The details: Idaho ranks 15th-lowest in property taxes at 0.75 percent and has a state income tax of up to 6.93 percent. While food is taxed at the 6 percent sales tax rate, the state provides a $110 per person credit; seniors get an additional $20. Railroad Retirement benefits are not taxed. Those 65 and older may qualify for a retirement-benefits deduction.

12. Mississippi

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,280

Average monthly nursing home cost (for a semi-private room): $7,118

The details: Mississippi has the second-lowest adjusted cost of living in the nation and has an effective property tax rate of 0.8 percent. The cost of in-home services is the third lowest in the U.S. (tied with Alabama). Retirement income is not taxed and homeowners 65 and up receive a property tax break.

11. Colorado

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Are Social Security benefits taxed? They may be taxed

Median monthly adult day care cost: $1,540

Average monthly nursing home cost (for a semi-private room): $8,567

Renters insurance offer: On Lemonade

The details: Yes, Colorado is another state that taxes Social Security benefits, but it only applies to those younger than 65, who are required to pay taxes on any retirement income over $20,000 if it’s also taxed by the federal government. But there’s good news: As of early 2022, federally taxed Social Security income is officially deductible for those 65 and older. Time to head to the mountains!

10. North Carolina

Great Smoky Mountains National Park North Carolina

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,220

Average monthly nursing home cost (for a semi-private room): $7,483

The details: North Carolina has a flat income tax rate of 5.25 percent. The “Bailey exemption” exempts certain types of retirement income if certain conditions are met. Railroad Retirement income is not taxed. There are also income-based property tax exclusions for seniors. The state’s property tax of 0.86 percent is less than more than half the states in the U.S.

9. Virginia

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,520

Average monthly nursing home cost (for a semi-private room): $8,213

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The details: Virginia’s residents’ property, income and sales taxes place the state in the middle range nationwide. (The state also levies a tax on the value of automobiles.) Those who are age 65 and older can deduct up to $12,000 per person of retirement income, based on their adjusted gross income. Tier I Railroad Retirement benefits are exempt. Counties, cities or towns are permitted to also enact a program for seniors that allows for exemption, deferral or a combination of both for property taxes. Those 65 and older who meet income requirements may also be eligible for motor vehicle tax relief.

8. Georgia

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,280

Average monthly nursing home cost (for a semi-private room): $7,011

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The details: Georgia residents pay between 1.0 to 5.8 percent in income tax and 7.15 percent sales tax. Real estate taxes, at 0.91 percent, are in the mid-range. In addition to Social Security income, up to $35,000 of most retirement income is exempt for those age 62 to 64; for those 65 and up, that number goes up to $65,000. Seniors may also receive deductions on property taxes.

7. Louisiana

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Are Social Security benefits taxed: No

Median monthly adult day care cost: $1,340

Average monthly nursing home cost (for a semi-private room): $5,759

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The details: Louisiana has the lowest annual cost of in-home services in the nation. While sales tax is high (up to 10 percent) and state income tax may be up to 6 percent, property taxes are the third lowest at 0.52 percent. Taxpayers 65 and older may exclude up to $6,000 per person of annual retirement income. Railroad Retirement benefits and deferred income from municipal and state police employees’ retirement plans are exempt from state income tax.

6. Delaware

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,560

Average monthly nursing home cost (for a semi-private room): $12,273

The details: Delaware has the sixth lowest property tax at 0.56 percent and the state’s income tax can be as high as 6.6 percent, but there’s no sales tax. The first $12,500 of investment and certain pension income for taxpayers over 60 are exempt from state income tax. Homeowners 65 and up can qualify for a reduction of school property taxes.

5. Nevada

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,500

Average monthly nursing home cost (for a semi-private room): $9,216

Renters insurance offer: On Lemonade

The details: Nevada’s average property tax of 0.69 percent falls in the lowest fourth of the nation. While residents pay 8.14 percent in sales taxes, there is no state income tax and retirement income is not taxed.

4. Florida

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,340

Average monthly nursing home cost (for a semi-private room): $8,654

Renters insurance offer: On Lemonade

The details: Florida has the highest population of residents age 65 and older. The state collects a sales tax of 5.17 percent and has an effective real estate tax rate of 0.98 percent. While these numbers seem high, they are offset by the fact that there’s no state income tax and retirement income of any type is not taxed. Residents over 65 may receive an additional homestead exemption on property taxes.

3. South Carolina

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,220

Average monthly nursing home cost (for a semi-private room): $7,285

Renters insurance offer: On Lemonade

The details: The cost to live in one’s home is manageable in South Carolina, where the effective property tax is 0.57 percent, the seventh-lowest in the country. The state and local sales tax rate is 7.37 percent. Those 65 and older may deduct up to $10,000 of qualified retirement income and the first $50,000 of a property’s fair market value.

2. Tennessee

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $1,600

Average monthly nursing home cost (for a semi-private room): $7,148

Renters insurance offer: On Lemonade

The details: Tennessee has no state income tax and its effective real estate tax rate is 0.74 percent. Those over 65 who meet income requirements are exempt from the state’s tax on dividends and interest, and those over 100 years of age pay no taxes at all. Eligible residents 65 and older may also receive some property tax relief.

1. Alabama

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Are Social Security benefits taxed? No

Median monthly adult day care cost: $620

Average monthly nursing home cost (for a semi-private room): $6,676

The details: Alabama has the fourth-lowest adjusted cost of living in the U.S. It also has the second-lowest property taxes in the country (0.42 percent) and the third-lowest annual cost of in-home services, so residents here may find it easier to remain in their homes. Most pensions are exempt from state income taxes. Homeowners 65 and up are also exempt from state property taxes and may qualify for discounts on county and local property taxes.