Side-by-side for American retirees in 2026.
Cheapest of the major southern retirement states. Social Security, government pensions, and most defined-benefit pensions fully exempt — plus rock-bottom property taxes.
Underrated mid-Atlantic option. No sales tax, low property tax, and a meaningful pension exclusion. Coastal beach towns are surprisingly affordable.
| Progressive, top 5% | Income tax | Progressive, top 6.6% |
| Exempt | Social Security | Exempt |
| Defined-benefit pensions + SS exempt; partial exemption for IRA/401k at 65+ | Pension treatment | $12,500 pension exclusion at 60+ ($25K per couple) |
| 0.40% | Property tax (effective) | 0.61% |
| 9.29% | Avg combined sales tax | 0.00% |
| 88.1 | Cost of living (US=100) | 102.7 |
| None | Estate / inheritance tax | None |
| Hot humid summers, mild winters. Gulf Coast (Mobile, Gulf Shores) has Florida-like climate. | Climate | Four mild seasons. Coastal moderation keeps winters mild and summers tolerable. |
| Mixed — strong in Birmingham (UAB), weaker in many smaller cities. Best to retire near a major medical center. | Healthcare | Solid — ChristianaCare (Wilmington area), proximity to Penn Medicine and Johns Hopkins. |
| Fairhope, Huntsville, Auburn | Top retirement cities | Lewes, Rehoboth Beach, Wilmington |
Homestead exemption + age 65+ full state property tax exemption on principal residence
Senior school property tax credit up to $500 for 65+; some county-level senior tax relief
Alabama: Cheapest of the major southern retirement states. Social Security, government pensions, and most defined-benefit pensions fully exempt — plus rock-bottom property taxes. Delaware: Underrated mid-Atlantic option. No sales tax, low property tax, and a meaningful pension exclusion. Coastal beach towns are surprisingly affordable. The right choice depends on your income mix, climate preference, and whether state income tax matters more to you than property tax.
No, Alabama does not tax Social Security retirement benefits.
No, Delaware does not tax Social Security retirement benefits.
Alabama's cost of living index is 88.1 (US = 100). Delaware's is 102.7. Alabama is cheaper on average.
Enter your retirement income and see the after-tax difference between Alabama and Delaware in 30 seconds.
Open tax estimator →Tax data current as of 2026 publication. Rates and rules change annually — verify with a CPA before relocating. This page is educational and not personalized tax or legal advice.