Income Tax for Tennessee (2026)

How This Calculator Works in Tennessee

This calculator confirms that Tennessee has no state income tax and helps you compare your overall tax situation with neighboring states. It can help you understand the tax savings of living in a no-income-tax state.

Tennessee Overview

Tennessee imposes no personal income tax on wages, salaries, or investment income. The state's former Hall Income Tax on interest and dividends was fully repealed in 2021 after a multi-year phaseout. Tennessee now relies on one of the nation's highest sales tax rates (7% state + local additions up to 2.75%) to fund government operations.

How Tennessee Compares

Tennessee's top income tax rate of 0% compares to Kentucky at 4% and Virginia at 5.75%. The absence of income tax makes it one of the most favorable states for high earners.

Tennessee's income tax 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 income tax on wages and salaries. The state's former Hall Income Tax on interest and dividends was fully repealed as of January 1, 2021.
• 2Tennessee has a 7% state sales tax — one of the highest in the country — plus local additions that can bring the combined rate to nearly 10% in some areas.
• 3The state offers a sales tax holiday each year (typically in late July) for back-to-school shopping on clothing, computers, and school supplies.
• 4Tennessee property taxes are relatively low, with an average effective rate around 0.64%, well below the national average.
• 5Business owners should note that Tennessee imposes a 6.5% excise tax on net earnings of certain business entities plus a franchise tax on net worth.

Frequently Asked Questions