Wouldn’t it be great to live somewhere where you don’t have to worry about paying income tax? Absolutely!
Fortunately, plenty of places around the world will let you live there without paying any local income tax. They come in three flavors:
Countries with no income tax, or no personal income tax.
Countries with territorial tax systems, where only income generated inside the country is taxed.
Countries where a tax treaty with the US results in a 100% tax credit for foreign-source passive income.
Here are 22 countries where US retirees can live without having to worry about paying tax to their governments:
| Region | Country | Tax System |
| Europe | France | 100% Tax Credit |
| Europe | Spain | 100% Tax Credit |
| Central America | Panama | Territorial Tax |
| Central America | Costa Rica | Territorial Tax |
| Central America | Belize | Territorial Tax |
| Central America | Nicaragua | Territorial Tax |
| Central America | Guatemala | Territorial Tax |
| South America | Paraguay | Territorial Tax |
| South America | Bolivia | Territorial Tax |
| South America | Uruguay* | Territorial Tax |
| Caribbean | Bahamas | No Income Tax |
| Caribbean | Bermuda | No Income Tax |
| Caribbean | Cayman Islands | No Income Tax |
| Caribbean | Antigua and Barbuda | No Personal Income Tax |
| Caribbean | St Kitts and Nevis | No Personal Income Tax |
| East Asia | Philippines | Foreign-source income exempt |
| East Asia | Georgia | Territorial Tax |
| East Asia | Hong Kong | Territorial Tax |
| East Asia | Macau | Territorial Tax |
| Oceana | Vanuatu | No Income Tax |
| Middle East | Bahrain | No Income Tax |
| Middle East | United Arab Emirates | No Personal Income Tax |
*For 11 years, then dividends and interests are taxed at 7-12%.
The World’s Best Retirement Havens for 2026
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Of course, not all of these destinations offer the same lifestyle, ease, or on-the-ground appeal. So, from this list, here are the 11 countries our editors recommend most—based on real expat experience.
France
La Belle France is perennially popular with US expats, since it has a relatively low qualifying income for a retiree visa… and, of course, culture, food, and landscapes to die for. It’s also one of two countries in Europe where a tax treaty with the US means retirees get a 100% tax credit on their retirement income. (You do have to file a French tax return to claim it.)
France does tax non-retirement income, like capital gains come interest, and rent. It also has an estate tax, so it’s important to plan for that if you’re going to buy property there.
Spain
Like France, Spain is becoming increasingly popular with Americans attracted to its Mediterranean lifestyle. Also, like its northern neighbor, Spain offers a 100% tax credit for local taxes against US retirement income. It has an estate tax.
Panama
Ever-popular Panama is one of the handful of countries around the world that doesn’t tax any income from outside the country. That includes all forms of retirement and investment income, as well as interest and rent. On top of that, the country’s popular pensionado visa requires only $1,000 a month in guaranteed income and offers all sorts of discounts and perks to boot.
Costa Rica
Panama’s northern neighbor has an identical tax policy: Outside income isn’t taxed. That’s one reason why foreigners flock to Costa Rica to enjoy its spectacular beaches and jungle-clad volcanic mountain ranges. Unlike Panama, however, the country requires you to contribute to the national health system. This levy is based on the income you bring into the country and typically ranges from 7% to 14%.
Belize
Belize is the only English-speaking country in Central America. But like its neighbors, it doesn’t levy any income tax on foreign source income. Described by some as a jungle with one of the world’s most beautiful coral-reef coasts, Belize offers an outdoor lifestyle like no other. Its qualified retiree program is also one of the easiest ways to acquire foreign residency in the world.
Nicaragua
Whilst not as popular with expat retirees as its Central American neighbors, Nicaragua has always attracted the more adventuresome set. The country still retains much of its colonial-era architectural heritage, especially in the towns along Lake Cocibolca. Like Panama, Costa Rica, and Belize, the country does not tax foreign-source income.
Guatemala
Belize’s neighbor to the west is another country that doesn’t tax foreign-source income. Like Nicaragua, the country retains much of its historical architecture, particularly Antigua, Guatemala, the original capital just west of Guatemala City. Most of the country is quite rustic, so it isn’t quite as popular as Panama and Costa Rica, but spectacular beaches and tropical jungles make it a unique place to live.
Paraguay
Moving to the opposite end of Latin America, Paraguay is another country that exempts all foreign source income from taxation. Traditionally overshadowed by its larger, more developed neighbors, Paraguay is beginning to attract attention as a country with relatively easy residency requirements, a very low cost of living, and a rapidly growing agricultural export sector that offers strong investment returns.
Bolivia
The “Queen of the Andes” is known for soaring mountain peaks, the Amazonian jungle, and the unique culture and dress of its indigenous inhabitants. Whilst not as popular with expats as Ecuador to the north, the country is nevertheless attractive for its low cost of living and unique culture.
Uruguay
Uruguay the only country in the world that guarantees foreigners the right to live in the country if they qualify. If you choose to do so, you are exempt from income tax on foreign source income for up to 11 years. (Alternatively, you can opt to lock in a fixed 7% tax rate in perpetuity, which is deductible from your US taxes.) The country is becoming increasingly popular with N Americans, who are learning what many Europeans have known for decades: The “Switzerland of South America” is one of the undiscovered gems not just of South America, but of the world.
Philippines
The Philippines is one of the few countries in Asia with a territorial tax system that doesn’t cover foreign source income. Like the Latin American countries that operate the same system, all your retirement income, whether from a formal pension or investments, is tax-free. The Philippines has always been attractive to a certain class of retiree expats, especially because of its 7,000+ islands, low cost of living, English-language proficiency, and cultural affinity with Americans.
A few important details to keep in mind…
We’re only talking foreign tax here. All US taxpayers must file and pay taxes on their global income, even if they’re not living abroad. Although there are some tax credits and exemptions if you’re still earning income from work, there aren’t any for passive income.
In most cases, you won’t pay any income tax in countries where the local tax rate for your income bracket is lower than in the US. In such cases, you’ll get 100% tax credit for taxes already paid to the IRS (but you’ll need to file taxes to get it).
US tax treaties with some countries exempt Social Security income from tax, but not private pensions. They include Canada, the United Kingdom, Germany, Ireland, Italy, and Romania.
Don’t forget about inheritance taxes. Once you’ve got assets in a foreign country, like a house and bank accounts, you’ll be subject to estate taxes in France, Spain, Bolivia, Uruguay, and the Philippines.
Finally, remember that some countries exempt retirement income from tax, but still tax investment income, interest, and rent. In such places, there’s no tax on public or private pensions, but you will pay tax on income from investments or savings.
The opportunities are real—but the details matter. Get them right, and you could enjoy life overseas with little to no local tax burden… and a lifestyle that costs far less than you might expect.
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The World’s Best Retirement Havens for 2026
The World’s Best Retirement Havens for 2026
24 Countries Compared, Contrasted, Ranked, and Rated. You don’t have to be rich to enjoy a pampered retirement, you just need to know where to go. With our 35th Annual Global Retirement Index, our experts hand you a detailed roadmap. Details—and a Special Offer—Here
By submitting your email address, you will receive a free subscription to IL Postcards, The Untourist Daily and special offers from International Living and our affiliates. You can unsubscribe at any time, and we encourage you to read more about our Privacy Policy.