Mississippi: The Most Tax-Friendly State for Retirement in 2025

Mississippi is ranked as the most tax-friendly state for retirees due to its exemptions from state taxes on retirement income, including Social Security benefits, pensions, retirement account distributions, and military retirement pay. The state also has a flat income tax of 4.4% over $10,000, which will decrease to 4% in 2026. Mississippi has no estate or inheritance tax and a low median property tax bill of $1,189.

Mississippi stands out as the most tax-friendly state for retirees, according to recent financial analyses. This ranking is primarily due to its comprehensive exemptions from state taxes on retirement income, including Social Security benefits, pensions, retirement account distributions, and military retirement pay [1]. Additionally, Mississippi boasts a flat income tax rate of 4.4% over $10,000, which will decrease to 4% in 2026, making it an attractive option for those looking to minimize their tax burden during retirement.

The state's tax-friendly environment is further enhanced by the absence of estate or inheritance taxes. This tax-free status for estates and inheritances can significantly impact the financial planning of retirees, as it allows for the preservation of wealth for future generations without the burden of additional taxation. Mississippi also features a low median property tax bill of $1,189, which is considerably lower than many other states, providing retirees with additional financial relief.

The combination of these favorable tax policies positions Mississippi as a highly appealing destination for retirees seeking to optimize their financial situation. While the state may not offer the same amenities or weather conditions as more expensive retirement destinations, its tax benefits can make up for these differences, allowing retirees to stretch their dollars further.

References:
[1] https://www.ooma.com/blog/most-and-least-expensive-states-for-retirees/?srsltid=AfmBOorXm0l47Hc2Dlu7B9JEHcehP0yKnagA3FDCM7AJ6GO509TG6OV2