May 4, 2026

11 Countries Where Retirees Can Legally Pay $0 Local Tax on Income

Written by Gabrielle Olya

Edited by Levi Leidy

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Taxes can take a significant bite out of retirement income, especially for Americans living on fixed budgets. Fortunately, retiring abroad can reduce that burden significantly.

A recent International Living report identified countries that don’t tax foreign‑source retirement income, and narrowed the list to destinations offering affordability, stability and a high quality of life for expat retirees.

Here are 11 countries for retirees who want to enjoy a desirable lifestyle without worrying about local income taxes.

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Belize

Belize doesn’t levy any income tax on foreign-source income, including retirement income.

Bolivia

Bolivia has a territorial tax system, which means that only income generated inside the country is taxed.

Costa Rica

Costa Rica doesn’t tax any income from outside the country, which includes retirement income. However, it does require you to contribute to the national health system; based on the income you bring into the country, that amount typically ranges from 7% to 14%.

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France

France is one of two European countries that has a tax treaty with the United States that enables retirees to get a 100% tax credit on their retirement income.

Guatemala

Any U.S. retirement income you earn won't be taxed by Guatemala, which doesn't tax any foreign-source income.

Nicaragua

Nicaragua also doesn't tax any foreign-source income.

Panama

Panama doesn’t tax any income from outside the country, including all forms of retirement income.

Paraguay

All foreign-source income is exempt from taxation in Paraguay.

Philippines

Thanks to its territorial tax system, U.S. retirees living in the Philippines can hold onto all of their retirement income -- whether from a formal pension or investments -- without paying taxes.

Uruguay

Americans in Uruguay are exempt from income tax on foreign-source income for up to 11 years. If you plan to live there much longer, you can opt to lock in a fixed 7% tax rate in perpetuity, which is deductible from your U.S. taxes.

Spain

Like France, Spain is another European country that offers a 100% tax credit for local taxes against U.S. retirement income.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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Written by

Gabrielle Olya

Edited by

Levi Leidy