5 States That Don’t Tax Your Retirement Income

3. Tennessee

Insider Monkey Score: 14

Tax Friendliness: Tax-friendly

Cost of Living Index: 90.3

Even though you will pay federal taxes wherever you live, Tennessee does not have an income tax on its own. This means social security benefits and income from retirement accounts are not taxed at the state level. The state also boasts low property taxes, making it tax-friendly for retirees. However, sales tax can hit Tennessee’s residents quite a bit hard. The overall average state and local sales tax rate can be as high as 9.61%, whereas the set sales tax rate is 7%. The cost of living can offset some of this since living expenses are 9.7% lower than the national average.