Yahoo Finance

Retirement is the time to enjoy the fruits of your hard work, but taxes can shrink those hard-earned dollars fast — especially when it comes to pensions. While federal taxes on pension income are unavoidable, state policies vary widely.

This patchwork of tax laws means that where retirees live matters just as much as how they save. Choosing a state that leaves pensions untaxed can preserve more income for the things that truly matter, from travel plans to healthcare.

Here’s a closer look at the states that spare pensions from taxes, according to Kiplinger. Plus, we’ve included insights on other living costs (property tax rates, according to Tax-Rates.org and cost of living, according to Forbes) that round out the retirement picture.

See More: America’s 30 Safest and Wealthiest Retirement Towns

Read Next: 4 Subtly Genius Moves All Wealthy People Make With Their Money

Alaska

• Property tax rate: 1.04%

• Cost of living: $48,670

For retirees looking for a unique adventure, Alaska combines no retirement income taxes with an annual dividend payment from the Permanent Fund. However, living costs can be higher due to the remote nature of many areas.

For You: 10 States With Low Taxes and 10 Low-Cost-of-Living States Retirees Should Target

Florida

• Property tax rate: 0.97%

• Cost of living: $40,512

Florida doesn’t tax retirement income, including pensions, 401(k) withdrawals and Social Security. It’s one of the most popular destinations for retirees thanks to its sunny weather, homestead property tax exemptions and senior-friendly communities.

Nevada

• Property tax rate: 0.84%

• Cost of living: $41,630

Nevada’s tax-friendly policies extend to retirement income, with no taxes on pensions or Social Security benefits. While Las Vegas is the most well-known city, the state has plenty of quieter areas for retirees seeking a slower pace.

New Hampshire

• Property tax rate: 1.86%

• Cost of living: $45,575

New Hampshire doesn’t tax wages, pensions or Social Security benefits. It does currently levy taxes on dividends and interest, but this is set to stop this year. Property taxes are among the highest in the nation, but the state’s lack of sales tax helps offset this.

South Dakota

• Property tax rate: 1.28%

• Cost of living: $36,864

South Dakota offers significant tax benefits for retirees by not taxing pensions, retirement distributions or Social Security. Affordable living costs and moderate property taxes make it one of the most practical states for stretching retirement income.

Tennessee

• Property tax rate: 0.68%

• Cost of living: $34,742

Tennessee repealed its tax on interest and dividends in 2021 (according to the states official website), leaving pensions and other retirement income untaxed. Combine that with some of the lowest property taxes in the country and a cost of living that’s easy on the wallet and it’s clear why Tennessee appeals to retirees.