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Retirement Tax Relocation (2026): The Four Taxes That Change When You Move

Updated July 25, 2026. Quick answer (2026): Four separate taxes change when a retiree moves state — income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs the people who inherit. Almost every relocation comparison prices only the first. That is a problem, because 13 jurisdictions already leave retirement withdrawals untaxed, so for residents of those states the income-tax saving from moving is exactly zero — while 13 still levy an estate tax and 5 still levy an inheritance tax, several with thresholds that have not been indexed in years.

The mistake: comparing one tax out of four

The standard relocation article compares top income-tax rates and stops. For a working household that is roughly right. For a retiree it can be exactly backwards, in three ways:

  • Your origin state may already exempt the income. Illinois and Pennsylvania both tax wages and both exempt retirement-plan withdrawals. A retiree leaving either state for Florida saves nothing on income tax.
  • The destination may tax what your origin does not. Leaving a state that exempts withdrawals for one that taxes them starts a bill you do not currently pay.
  • The largest number is usually at death. An estate-tax threshold that has not moved since 2020, or an inheritance tax charged from the first dollar, will dwarf a few points of annual income tax.

Where moving saves you nothing on income tax (13 jurisdictions)

These jurisdictions do not tax typical retirement-plan withdrawals. If you live in one, a move cannot reduce your state income tax on those withdrawals, because it is already zero.

JurisdictionHow retirement withdrawals are treated
AlaskaNot taxed (no state income tax).
FloridaNot taxed (no state income tax).
IllinoisFully exempt: all federally taxed retirement income is subtracted — qualified employer plans (401(k), 403(b), 457), traditional IRA distributions (including Roth conversions), private and government p
IowaFully exempt for taxpayers 55+ (also disabled taxpayers and eligible survivors): pensions (public and private, incl.
MississippiFully exempt: all qualified retirement income — pensions (public/private), 401(k)/403(b), IRA distributions taken per plan terms (normal retirement), annuities.
NevadaNot taxed (no state income tax).
New HampshireNot taxed.
PennsylvaniaNot taxed in retirement: distributions from eligible employer-sponsored plans (pensions, 401(k), 403(b)) are exempt when made after retirement upon meeting the plan’s age or years-of-service condition
South DakotaNot taxed (no state income tax).
TennesseeNot taxed (no state income tax).
TexasNot taxed (no state income tax).
WashingtonNot taxed (no personal income tax;
WyomingNot taxed (no state income tax).

The 13 states with an estate tax

Read the threshold, not the rate. Several are not indexed to inflation, and at least one is a cliff rather than an exemption — meaning an estate one dollar over the line is taxed on the whole amount, not on the excess.

State2026 estate tax position
Connecticutyes – 2026 exemption $15,000,000 (statutorily tied to the federal basic exclusion amount); flat 12% rate on the excess; total tax capped at $15M; CT also levies the only state gift tax (unified with estate)
District of Columbiayes – 2026 zero-bracket (exemption) $4,988,400, up from $4,873,200 in 2025 (CPI-indexed annually); rates 11.2%-16%
Hawaiiyes – exemption $5,490,000 (fixed since 2018, not indexed); rates 10%-20% (top 20% on taxable amount over $10M above the exemption); Hawaii-level portability between spouses allowed
Illinoisyes – $4,000,000 exclusion (not indexed, not a true exemption: estates over $4M are taxed using the pre-2001 federal state-death-tax-credit table on the full taxable estate); effective marginal rates commonly stated as 0.8%-16%; administered by the IL Attorney General
Maineyes – 2026 exclusion $7,160,000 (2025: $7,000,000; 2024: $6,800,000; indexed annually); rates 8% / 10% / 12% (top 12%)
Marylandyes (BOTH taxes – only state) – estate tax exemption $5,000,000 (fixed since 2019, not indexed); graduated rates up to 16%; Maryland-only portability of unused spousal exclusion allowed. Inheritance tax paid on a bequest is credited against estate tax
Massachusettsyes – $2,000,000 effective exemption via a $99,600 credit, for deaths on/after 1/1/2023; graduated rates 0.8%-16% (top 16%); no indexing
Minnesotayes – $3,000,000 exclusion (unchanged since 2020, not indexed); rates 13%-16%; additional qualified small business / farm property deduction up to $2,000,000 (combined max $5,000,000). Official 2025 Form M706 instructions confirm: ‘For 2025 decedents, the exclusion amount and tax filing threshold is $3,000,000… maximum qualified small business property and farm property deduction amount is $2,000,000’
New Yorkyes – 2026 basic exclusion amount $7,350,000 (deaths 1/1/2026-12/31/2026), up from $7,160,000 in 2025 (indexed annually); rates 3.06%-16% (top 16%); NOTE the ‘cliff’: taxable estates exceeding 105% of the BEA (~$7,717,500 in 2026) lose the entire exclusion and are taxed from dollar one
Oregonyes – $1,000,000 filing threshold/exemption (lowest in the nation; fixed, not indexed); rates 10%-16% on the amount above $1M; no spousal portability; natural resource (farm/forestry/fishing) credit available under ORS 118.140
Rhode Islandyes – 2026: net taxable estates of $1,838,056 or less exempt (credit $87,940), per RI Division of Taxation Advisory ADV 2025-27; up from $1,802,431 in 2025 (CPI-U indexed annually); rates 0.8%-16%
Vermontyes – $5,000,000 exclusion (since 2021, not indexed); flat 16% on the Vermont taxable estate above $5M. VT Dept. of Taxes: tax ‘is assessed only on the gross estate value exceeding $5 million’
Washingtonyes – 2026 applicable exclusion per WA DOR tables: $3,076,000 for deaths 1/1/2026-6/30/2026, then $3,000,000 for deaths on/after 7/1/2026 (no further increases due to an expired CPI reference in statute). Rates for deaths on/after 7/1/2025: 10% to a top rate of 35% (35% on taxable amount over $9,000,000) – the highest state estate tax rate in the U.S.

The 5 states with an inheritance tax

An inheritance tax is charged to the person receiving the money, by relationship. Spouses and children are usually exempt; siblings, nieces, nephews and unmarried partners usually are not.

State2026 inheritance tax position
Kentuckyyes – Class A (spouse, parent, child, grandchild, sibling, half-sibling): fully exempt for deaths after 6/30/1998; Class B (niece/nephew, half-niece/nephew, daughter/son-in-law, aunt/uncle, great-grandchild): $1,000 exemption, rates 4%-16%; Class C (all others): $500 exemption, rates 6%-16%
Marylandyes – 10% on ‘collateral’ beneficiaries (e.g., nieces/nephews, cousins, friends, unmarried partners); EXEMPT: spouse, children and other lineal descendants and their spouses, parents, grandparents, siblings, stepchildren/stepparents, and small transfers under $1,000
Nebraskayes – county-level tax, three classes (rates set by LB 310 (2022), effective for deaths on/after 1/1/2023, still current for 2026): Class 1 immediate relatives (parents, siblings, children, grandchildren) 1% above $100,000 exemption; Class 2 remote relatives (aunts/uncles, nieces/nephews and their descendants) 11% above $40,000; Class 3 all others 15% above $25,000. Exempt: surviving spouse, charities, and any beneficiary under age 22
New Jerseyyes – Class A (spouse/civil union/domestic partner, parents, grandparents, children/grandchildren, stepchildren, mutually acknowledged children): exempt; Class C (siblings, spouse/surviving spouse or civil union partner of a child): first $25,000 exempt, then 11% up to $1.1M, 13% next $300K, 14% next $300K, 16% over $1.7M; Class D (everyone else): 15% on first $700,000, 16% above; Class E (charities, religious/educational/medical institutions, NJ government): exempt; transfers under $500 exempt
Pennsylvaniayes – rates by relationship, from the first dollar (no exemption thresholds): 0% surviving spouse and parent-to-child under 21; 4.5% lineal heirs (children, grandchildren, parents); 12% siblings; 15% all others; charities/government exempt; family farm and family business exemptions available

Does any of this apply to you?

Be honest with the arithmetic before you move for it. Below $1,000,000 no US state estate tax applies anywhere — Oregon has the lowest threshold in the country and that is where it begins. Below roughly $2,000,000 only Oregon and Rhode Island reach you at all. For the large majority of estates the entire “escape the death tax” argument is irrelevant, and the only thing a move changes is your annual income tax — which, if you are leaving one of the 13 jurisdictions that already exempt retirement withdrawals, is also zero.

Inheritance tax is the exception: Kentucky, Nebraska, New Jersey and Pennsylvania charge the heir by relationship, and Pennsylvania does it from the first dollar with no threshold at all. Maryland is the only state that levies both. Test your own numbers with the comparison tool or the personalised ranker.

District of Columbia, and ten further corridors

D.C. is one of the strongest origins in the country on the only test that matters here — how much the move actually saves. It levies a graduated income tax to 10.75% and an estate tax, a combination only a handful of jurisdictions match. It is now covered: leaving the District of Columbia.

Fourteen further corridors, July 2026

Ranked by how much the move actually saves multiplied by documented retiree migration volume. Three of them — Pennsylvania to Texas, Pennsylvania to Nevada and Washington to Texas — save nothing on income tax, because those origins already exempt retirement withdrawals or levy no income tax at all. For those retirees the entire case rests on the death tax, which is the part almost every relocation guide omits:

New destination: Mississippi

Mississippi has the strongest retiree tax profile of any state we did not previously cover: it fully exempts all qualified retirement income — pensions, 401(k) and IRA alike — and levies neither an estate nor an inheritance tax, on a flat rate falling to 3.75% in 2027. Full detail at retiring to Mississippi.

When you want a second opinion on the sequence

Pricing the move is one job; executing it in the right order is another. Domicile, Roth conversions, retitling and sale timing all interact, and several steps cannot be undone once taken. If a move is genuinely on the table, finding an advisor for a cross-state move covers what to look for and the five questions to ask before you engage anyone.

Corridor comparisons

Built from the same dataset, one page per corridor, chosen from documented retiree migration flows. Each compares all four taxes for that specific pair.

By destination:

Leaving California

Leaving Colorado

Leaving Connecticut

Leaving Hawaii

Leaving Illinois

Iowa

Kansas

Leaving Maine

Leaving Maryland

Leaving Massachusetts

Leaving Michigan

Leaving Minnesota

Nebraska

Leaving New Jersey

Leaving New York

Leaving Ohio

Leaving Oregon

Leaving Pennsylvania

Leaving Rhode Island

Leaving Vermont

Leaving Virginia

Leaving Washington

Leaving Wisconsin

Corridors added July 2026

Eight further corridors, chosen by scoring every missing origin-destination pair on how much the move actually saves rather than on search volume alone. All eight are cases where the retiree both stops paying an income tax on withdrawals and leaves a death tax behind:

Compare any two states yourself

The corridor pages cover the moves retirees make most often. For any other pair, the retirement tax comparison tool runs all 51 jurisdictions: pick two states and it returns the income-tax treatment of withdrawals, both death taxes and the probate fee model side by side. Enter an estate value and it tells you whether you cross either state’s estate-tax threshold — thresholds that run from Oregon’s $1,000,000 to Connecticut’s $15,000,000, several of them unindexed for years.

Which states should you even consider?

Published “best states to retire” lists blend an annual income-tax rate with a one-off estate threshold into a single score, which produces a ranking that is true for nobody. The personalised ranker takes your withdrawals and estate value and orders all 51 jurisdictions for your situation instead — Illinois ranks third for a $300,000 estate and drops off the list entirely at $6,000,000, because of a $4M cliff no listicle mentions.

Before you count any saving

  • Domicile is a test, not an address. High-tax states audit departing residents. Days present, licence, registration, where your advisers are, and where you keep what you value all count.
  • Real property does not move with you. A home kept in the origin state can stay within reach of that state’s estate rules.
  • Sequence the Roth conversion. A conversion is taxed where you are domiciled in the year you convert — see how all 51 jurisdictions tax Roth conversions.
  • Probate is avoided by a funded trust, not by a change of address. See probate cost by state.

Getting a second opinion

Relocation timing, conversion sequencing and estate exposure interact, and the order matters. If you want help, know what it should cost first — see our advisor cost guide and fee-drag calculator.

Talk to a fiduciary advisorSponsored advisor-matching link. We may earn compensation if you submit the third-party form. Compare fees, scope, conflicts, credentials, and fiduciary duty before hiring.

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Cite or share this research

Suggested citation: Clear Money Guide, “Retirement Tax Relocation: The Four Taxes That Change (2026),” statute-cited; clearmoneyguide.com/retirement-tax-relocation/. Free to cite with attribution. Download the full dataset as CSV, or contact contact@clearmoneyguide.com for custom cuts.

Methodology: compiled from state statutes, session laws and revenue-department publications, adversarially verified July 2026. Where a widely reported change did not actually become law, we say so. Nothing here is personalized tax or legal advice.