Results are estimates for educational purposes only. Based on 2026 IRS federal brackets and Tennessee state tax rates. Always consult a qualified tax professional.
Tennessee income tax overview
Tennessee has no state income tax on wages or salaries, making it one of nine states with this distinction. Tennessee previously taxed interest and dividend income under the 'Hall Tax' but that was fully repealed in 2021. Today Tennessee residents pay zero state income tax on any form of income. The state funds government through a 7% sales tax (one of the highest in the nation) plus local additions that push combined rates up to 9.75% in some areas. Nashville's explosive growth as a business and entertainment hub has been partly driven by the zero income tax environment attracting high earners from California, New York, and Illinois.
2026 Tennessee income tax rates
✅ All income — no state income tax
Worked example: $75,000 salary in Tennessee
A $75,000 salary in Tennessee results in $0 state income tax, plus $12,580 federal tax, $4,650 Social Security, and $1,088 Medicare. Annual take-home is approximately $56,682, or $2,180 bi-weekly.
Key facts: No state income tax · Hall Tax fully repealed 2021 · High sales tax up to 9.75%
Frequently asked questions — Tennessee income tax
Tennessee previously taxed investment income (dividends and interest) under the Hall Income Tax at 1–6%. This was phased out and fully repealed on January 1, 2021. Since then Tennessee has had absolutely no state income tax of any kind.
With no income tax at all, Tennessee taxes no retirement income — not Social Security, pensions, 401k distributions, or IRA withdrawals. This makes it highly attractive for retirees.
Nashville combines zero income tax, relatively affordable housing (though rising fast), a booming healthcare and tech industry, and a vibrant culture. High earners from coastal states save thousands per year, making the relocation financially compelling.
No. Tennessee cities and counties cannot levy local income taxes.
Tennessee residents pay federal income tax, FICA taxes, and sales tax of up to 9.75% combined state and local. Property taxes in Tennessee are relatively low compared to national averages.