After decades in the fire service, you might be dreaming of a sunny, affordable place to retire. More than 338,000 Americans relocated for retirement in 2023, a 44% jump from 2022, and roughly one-quarter of those retirees moved to a different state. (1) Naturally, plenty of firefighters also consider hanging up their helmets and moving to warmer climes with lower costs and lower taxes once they retire. But before you swap your turnout gear for flip-flops and uproot your life, let’s first consider how an out-of-state move could affect your pension and finances, so you don’t end up regretting your big move, or worse, derail your retirement financial plan.
Tax-Friendly vs. Taxing States
One of the biggest financial factors in choosing where to retire is state income tax, especially how it applies to your pension. Some states are extremely friendly to firefighter retirees, not taxing pension income at all, while others will treat your pension like ordinary income and take a bite out of each check. Understanding these differences can mean the difference of thousands of dollars per year in after-tax income.
States With No Income Tax
If you move to a state that has no state income tax, your pension (and other retirement income) will continue to be free of state taxation. Popular firefighter retirement destinations like Florida and Texas fall into this category – neither state levies any income tax, meaning your pension won’t be taxed there.(2) Washington, Nevada, Wyoming, Alaska, New Hampshire, South Dakota, and Tennessee are also income-tax-free, which is a key reason these places attract retirees. (3)
States That Exempt Pensions
Beyond the no-tax states, several states do have an income tax, but specifically exempt public pensions or retirement income from taxation. New York State is a prime example: it does not tax income from New York public employee pensions (including firefighter pensions) at the state or city level.(3) That means if you’re an FDNY retiree and stay in New York (or move to a state with no income tax or one that honors New York’s pension exemption), you won’t pay any state/local tax on your pension.(4)
Similarly, states like Illinois, Mississippi, and Pennsylvania exempt most or all retirement income from their state income taxes.(5)
States That Tax Pensions
On the other end of the spectrum, many states do tax pension income to some degree. For instance, a firefighter who moves from tax-free Florida to a state with a 5% income tax would see a $50,000 annual pension now incur about $2,500 per year in state taxes. Over a long retirement, that adds up. New Jersey, for example, has an income tax and taxes pensions; however, it offers large exclusions (up to $100,000 of retirement income can be exempt if you meet certain criteria), which can lessen the blow. (1) North Carolina taxes most retirement income at a flat rate (4.25% as of 2025), and California fully taxes pensions at some of the highest rates in the nation (up to 9–12% depending on income level).(6)
Pension Tax Impact Analyzer
Only Your New State Can Tax You
The good news is that once you move, your former state generally cannot tax your pension thanks to federal law. Only the state where you reside in retirement can tax your retirement income.(7) So if you’re leaving a high-tax state, you won’t owe them anything on your pension going forward. This puts the focus squarely on your new state’s tax rules. Before relocating, research the tax laws of any state you’re considering: Does it tax public sector pensions? Does it fully exempt them or partially tax them? Some states offer partial breaks (for example, a fixed dollar amount of pension income is exempt, or they only tax amounts above a certain threshold). Understanding these details will help you avoid nasty surprises when you get that first pension check in your new home.
Do your homework on state taxes. A move can either preserve your pension’s full value (if you choose a tax-friendly locale) or chip away at it (if you land in a tax-hungry state). Taxes aren’t the only factor, of course, but for many firefighter families, they’re a big one. Next, we’ll look at how the cost of living can make a low-tax state more (or less) affordable overall.
Cost of Living: Beyond Taxes, What Will It Cost to Live?
State income tax is just one piece of the puzzle. Cost of living, including housing, property taxes, utilities, and everyday expenses, plays a huge role in whether relocating actually saves you money. A state with no income tax might have high housing costs or insurance rates that offset those tax savings. On the other hand, a state with a modest tax might still be cheaper to live in if home prices, taxes, and groceries are far less expensive than what you’re used to.
Housing Costs
For most retirees, housing is the single biggest expense. This is where moving out-of-state can be a game-changer. If you’re coming from a pricey real estate market (say, the Northeast or West Coast), you might be able to sell your home and buy a comparable house for a fraction of the price in states like Florida, Texas, or the Carolinas. Many firefighters retire with significant home equity, and relocating can stretch those dollars further.
| State | Median Home Price (2025) | Property Tax Rate | Insurance & Notes |
|---|---|---|---|
| Hawaii | $975,500 | ~0.26% | Very high home values; coastal insurance premiums steep in hurricane zones. |
| California | $866,100 | ~0.74% | Moderate property taxes; high wildfire & earthquake insurance costs. |
| Florida | $389,500 | ~0.83% | Hurricane insurance required in coastal areas; no state income tax. |
| Texas | $348,000 | ~1.69% | High property taxes offset by no state income tax; lower insurance costs. |
| North Carolina | $315,000 | ~0.84% | Moderate costs overall; some coastal insurance considerations. |
| Tennessee | $295,000 | ~0.64% | No state income tax; affordable housing with reasonable insurance costs. |
| South Carolina | $285,000 | ~0.57% | Lower property taxes; coastal areas require hurricane insurance. |
| Mississippi | $114,500 | ~0.52% | Low insurance costs; senior homestead exemptions available. |
| West Virginia | $115,000 | ~0.49% | Low insurance; low cost of living; healthcare access varies. |
Sources:
https://www.bankrate.com/real-estate/median-home-price/
https://taxfoundation.org/property-taxes/
For example, the median home price in parts of Florida or Texas might be hundreds of thousands less than in the New York City or Bay Area markets. Lower housing costs can mean a smaller (or no) mortgage in retirement, freeing up income. However, be mindful of property taxes and insurance in your target state. A state like Texas has no income tax but relatively high property taxes. Florida’s property taxes are moderate, but home insurance costs have risen (especially in coastal areas prone to hurricanes). Always factor in property taxes on that “cheaper” house – some states offer homestead exemptions or senior discounts on property taxes, which is worth researching as well.
Cost-of-Living Differences
It’s helpful to compare general cost-of-living indices between your current location and your potential new home. These indices combine the costs of housing, food, transportation, healthcare, and more. For instance, New York has a cost-of-living index around 125 (25% above the U.S. average), while Florida is about 102, and states like South Carolina and Texas are around 94–92 (below the national average). (1)
Retirement Location Cost Calculator
In practical terms, this means everyday life is much cheaper in SC or TX than in NY. Even within a state, costs can vary: urban centers cost more than rural areas. Many popular retirement states are cheaper than the big cities where firefighters often spent their careers. Your pension dollar could go further when you’re paying less for a gallon of milk, a tank of gas, or a property tax bill.
Healthcare and Insurance Costs
Another key cost factor is healthcare. As a firefighter, you may have retirement health benefits or you’ll be navigating Medicare and supplements. Either way, look at the healthcare landscape in your potential new state. Some states have more robust healthcare systems or lower costs for services. For example, a state like Florida has many hospitals and clinics geared toward retirees, but if you move to a very rural area, you might travel farther for specialized care. If your firefighter retiree health insurance (from your city or state) continues into retirement, confirm that you can use it out-of-state.
Healthcare Cost & Coverage Analysis
Most retiree health plans do offer nationwide provider networks, but you’ll want to ensure your new local doctors and hospitals accept it. If you’re under 65 and need to buy private health insurance, factor in that cost – states that didn’t expand Medicaid or that have less competition on the ACA marketplace might have higher premiums. Also, note that some states tax other things differently (sales tax, vehicle taxes, etc.), which affect your cost of living. For example, sales taxes in Florida and Texas are higher than in many income-taxed states (since those states must fund services somehow). This means you might pay a bit more on purchases, which slightly offsets the lack of income tax. The overall cost picture is what matters.
In Conclusion
Retiring out of state can be an exciting new chapter. But not first considering taxes, cost of living, healthcare, and family needs ahead of time, could set you up for a rough transition. Then you can kick back and enjoy the retirement you worked so hard for, with confidence that you made the choices that are right for you and your family. Wherever you go, stay safe, stay financially savvy, and enjoy the next adventure after the firehouse!
At Protection Red, we’re committed to protecting those who protect and serve. That means helping firefighters and first responders navigate major decisions such as relocation. Whether you dream of fishing on a Florida pier, hiking in the Rockies, or just finding a quiet town where your retirement dollars go further, we can help craft a plan that works for you and your finances. Just click the button below to arrange a day and time convenient for you.
Sources:
https://www.kiplinger.com/retirement/retirement-planning/states-that-dont-tax-retirement-income
- https://www.nyc.gov
- https://www.osc.ny.gov/retirement/retirees/taxes-and-your-pension
https://www.bankrate.com/retirement/states-that-dont-tax-retirement-income/
https://www.empower.com/the-currency/retirement/which-states-tax-retirement-income
https://www.wipfli.com/insights/articles/tax-st-which-states-tax-pension-income
