Keep in mind that if you live in a state that has an income tax, you may be looking at more than just a federal tax bill in retirement. How to lower your tax bill in retirementYou may not be able to get out of paying taxes completely in retirement. Roth accounts don't give you a tax break on retirement plan contributions, but withdrawals from a Roth IRA or 401(k) plan are tax-free. Roth accounts don't give you a tax break on retirement plan contributions, but withdrawals from a Roth IRA or 401(k) plan are tax-free. Retiring somewhere without an income tax, or in a state that doesn't tax Social Security, could provide some financial relief, especially if you have a lot of taxable income sources.