Capital Gains Tax for Tennessee (2026)
Tennessee (TN) Key Facts
State Capital Gains Rate
0%
Taxed As
Not taxed at state level
Federal Rate Applies
Yes (0%, 15%, or 20%)
Long Term vs Short Term
No state tax on either
How This Calculator Works in Tennessee
This calculator estimates your combined federal and Tennessee capital gains tax. Enter your gain amount, holding period, and income to see your estimated tax.
Tennessee Overview
Tennessee has no state capital gains tax. Tennessee fully repealed its Hall Tax on investment income in 2021. Investors only owe federal capital gains tax, which ranges from 0% to 20% for long-term gains plus a potential 3.8% Net Investment Income Tax for high earners.
How Tennessee Compares
Tennessee's capital gains rate of 0% compares to Kentucky at 4% and Virginia at 5.75%. No state capital gains tax provides a clear advantage for investors.
| State | Top Rate | Notes |
|---|---|---|
| Kentucky | 4% | Kentucky has a capital gains rate of 4%. |
| Virginia | 5.75% | Virginia has a capital gains rate of 5.75%. |
| North Carolina | 4.5% | North Carolina has a capital gains rate of 4.5%. |
Tennessee's capital gains rate of 0% compares to a national average of approximately 5.04%. This is below the national average.
Tips for Tennessee Residents
- 1Tennessee has no state capital gains tax, so you only pay federal rates on investment gains.
- 2Federal long-term capital gains rates are 0%, 15%, or 20% depending on income, plus a potential 3.8% Net Investment Income Tax (NIIT).
- 3Hold investments for over one year to qualify for the lower federal long-term rates instead of ordinary income rates.
- 4Tax-loss harvesting—selling losing investments to offset gains—can reduce your federal capital gains tax bill.
- 5Tennessee's zero state rate makes it one of the most favorable states for investors and retirees with investment income.