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.
Cheaper than its northern neighbor, with one of the most generous retirement income deductions in the country. Coastal retirement hubs and historic charm.
| Progressive, top 5% | Income tax | Progressive, top 6.2% |
| Exempt | Social Security | Exempt |
| Defined-benefit pensions + SS exempt; partial exemption for IRA/401k at 65+ | Pension treatment | $15K/person retirement deduction at 65+; Social Security fully exempt |
| 0.40% | Property tax (effective) | 0.53% |
| 9.29% | Avg combined sales tax | 7.50% |
| 88.1 | Cost of living (US=100) | 95.0 |
| None | Estate / inheritance tax | None |
| Hot humid summers, mild winters. Gulf Coast (Mobile, Gulf Shores) has Florida-like climate. | Climate | Warm humid summers, mild winters. Low country (Charleston, Hilton Head) is hot and humid; upstate (Greenville) is cooler. |
| Mixed — strong in Birmingham (UAB), weaker in many smaller cities. Best to retire near a major medical center. | Healthcare | Solid in major metros — MUSC (Charleston), Prisma Health (Greenville). More limited in rural areas. |
| Fairhope, Huntsville, Auburn | Top retirement cities | Hilton Head Island, Charleston, Bluffton |
Homestead exemption + age 65+ full state property tax exemption on principal residence
$50K homestead exemption + first $100K of home value exempt from school operating tax for 65+
Alabama: Cheapest of the major southern retirement states. Social Security, government pensions, and most defined-benefit pensions fully exempt — plus rock-bottom property taxes. South Carolina: Cheaper than its northern neighbor, with one of the most generous retirement income deductions in the country. Coastal retirement hubs and historic charm. 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, South Carolina does not tax Social Security retirement benefits.
Alabama's cost of living index is 88.1 (US = 100). South Carolina's is 95.0. Alabama is cheaper on average.
Enter your retirement income and see the after-tax difference between Alabama and South Carolina 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.