The Best (And Worst) States to Retire To - Part 1 of 2

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Nov 17, 2025

Retiring in popular no-income-tax states isn't always financially ideal. Some high-tax states can actually leave you with more money due to their effective tax rates. For instance, Iowa's effective tax rate can be significantly lower than Oregon's. The power of marriage in tax strategy can save couples thousands. It's critical to consider total tax burdens and not just income tax when making retirement plans. Context is key; the best state for retirement varies based on personal circumstances.

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ANECDOTE

Near Move To New Hampshire Was Halted

Tyler shares his brother's warning about moving for tax reasons and a near move to New Hampshire.
He nearly relocated but a CPA pointed out business taxes that negated the income-tax benefit.

INSIGHT

Small Rate Gaps Compound Big

Fidelity modeled $100,000 IRA withdrawals and found surprising state-by-state outcomes.
Small effective-rate gaps compounded at market returns can total tens of thousands over a decade.

INSIGHT

No Income Tax Is Not A Free Pass

Nine states have no income tax but other taxes can offset that perceived advantage.
Four states (Iowa, Illinois, Mississippi, Pennsylvania) exempt IRA withdrawals and can outperform no-tax states for retirees.

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Everyone will tell you to move to Florida or Texas to retire tax-free. But the truth? Taxes are more complicated than a “No State Income Tax” billboard. In this first part of a two-part series, we unpack The Great Tax Mirage and reveal why some so-called high-tax states like New Jersey, Pennsylvania, and Iowa may leave retirees with more money in their pocket than the sunny paradises they’re fleeing.

We dive into Fidelity’s latest study modeling retirees withdrawing $100,000 a year from an IRA and show how effective tax rates—what you actually pay after exemptions and deductions—can dramatically flip conventional wisdom on its head. For example, a couple retiring in Oregon might pay close to 13% in effective taxes, while a move to Iowa could drop that number to 7.5%, potentially growing tens of thousands of dollars over a decade.

We also explore the underrated power of marriage in retirement planning. Married couples filing jointly can save around six percentage points on combined federal and state taxes versus singles—enough to add tens of thousands of dollars to a nest egg over ten years.

Key takeaways from this episode include:

No state income tax doesn’t automatically mean you keep more money.
Certain high-tax states offer exemptions and deductions that outperform so-called tax havens.
Marriage can be one of the most powerful retirement tax strategies.
Your effective tax rate—not the headline rate—determines what you actually keep.
Planning where to retire is about life satisfaction as much as taxes.

Whether you’re dreaming of beaches, cornfields, or just a comfortable, worry-free retirement, this episode will change the way you think about where your money—and your life—goes next.

Part Two drops next week, where we’ll rank the best and worst states for retirees, explore the real impact of marital magic, and dig into other often-overlooked factors that matter more than taxes when choosing where to spend your golden years.

If you enjoy the show, please leave a review on Apple Podcasts or Spotify and share it with a friend who’s plotting their retirement escape. It helps more than you know—and makes sure that no one accidentally retires somewhere that quietly nibbles their nest egg.