Retire Tax-Free with Annuities

If your retirement plan includes guaranteed income from an annuity, here’s a little-known secret:

📍 Where you retire can dramatically change how much income you actually keep.

Many states offer zero income tax, and others have special tax breaks for retirees. Combine that with annuity-friendly laws, and you’ve got a powerful formula for tax-efficient retirement.

Here’s your 2025 list of the best states to retire tax-free with annuities—and why they’re winning big with smart retirees.

🌞 1. Florida

Zero State Income Tax + Asset Protection

• No state income tax on annuity payments
• Protects annuity assets from creditors
• Huge network of retirement planners and annuity providers
• Doesn’t tax Social Security or IRA withdrawals

💡 Why it’s top-tier: Tax savings, sunshine, and strong legal protection make Florida a triple win.

🌄 2. Nevada

Zero Income Tax + Premium Asset Protection

• No tax on annuity income
• Strong asset protection laws
• Fewer residency requirements than you’d expect
• Attractive to both high-net-worth and middle-income retirees

💼 Hidden perk: Nevada doesn’t tax capital gains either—great for retirees who diversify with real estate or investment accounts.

🏜️ 3. Texas

Zero Tax + Big Retirement Communities

• One of the largest populations of retirees
• No income tax means more of your annuity checks stay in your pocket
• Lower-than-average cost of living
• Friendly to veterans and federal retirees

🇺🇸 Tip: Texas also doesn’t tax military pensions, making it a magnet for veteran retirees.

🏔️ 4. Wyoming

Tax-Free, Debt-Free, and Annuity-Friendly

• Zero income tax, zero estate tax, and low property taxes
• Financially healthy state with a debt-free budget
• Annuities receive solid protection under state laws
• Quiet, peaceful retirement with plenty of outdoor lifestyle

🧘 Best for: Retirees who want wide open space and peace of mind with their income.

🏜️ 5. South Dakota

Top Asset Protection State + No Income Tax

• Annuity-friendly laws make SD a top pick for wealth preservation
• No tax on retirement income, annuities, Social Security, or pensions
• Frequently used for trust and estate planning
• Home to highly-rated trust laws and financial institutions

💎 High-net-worth families use SD to house annuities inside legacy plans or irrevocable trusts.

🏕️ 6. Tennessee

No Tax on Annuity Income Since 2021

• Eliminated its Hall Income Tax in 2021
• No tax on retirement income—including annuities
• Low property taxes and cost of living
• Scenic, affordable retirement towns (especially east Tennessee)

🎶 Bonus: Cities like Chattanooga and Knoxville are growing hotspots for young retirees.

🏞️ 7. Alaska

No Income Tax + Yearly Dividends

• No state income or sales tax
• Some residents receive an annual oil dividend from the state
• Annuities are exempt from state taxation
• Best for adventurous retirees who like independence and space

🌲 Best kept secret: Alaska has unique incentives for long-term residents. Just bundle up.

💡 What Makes These States So Annuity-Friendly?

When choosing a retirement destination, consider:

• No state income tax (keeps more of your monthly check)
• No tax on Social Security or annuity withdrawals
• Strong creditor protection on annuity assets
• Estate planning advantages (trust laws, no inheritance tax)

By combining the right annuity with the right tax-friendly state, you could boost your lifetime retirement income by 10–20% or more.

📌 Final Word: The State You Pick Can Supercharge Your Annuity

Annuities provide predictable income. But where you live determines how much you actually keep.

These seven states are leading the pack in 2025—offering low taxes, smart laws, and retirement-friendly living.

👉 Ready to make your annuity plan state-smart?

Book a free consultation with The Policy Shop to explore how to pair your annuity with the best state for retirement success.