How Tennessee taxes retirement income
Tennessee has no state income tax, so no retirement income is taxed at the state level: not Social Security, not pensions, and not 401(k) or IRA withdrawals. This makes Tennessee one of the more tax-friendly states for retirees. Federal income tax still applies.
Retirement income tax in Tennessee, at a glance
| Income type | Taxed by Tennessee? |
|---|---|
| Social Security | No |
| Pensions | No |
| 401(k) / IRA withdrawals | No |
| Estate / inheritance tax | None |
| Avg. property tax rate | 0.52% of home value |
Does Tennessee tax Social Security benefits?
No. Tennessee does not tax Social Security benefits. That follows automatically from having no state income tax.
Does Tennessee tax pensions and 401(k) or IRA withdrawals?
No. With no state income tax, Tennessee does not tax pension income or withdrawals from 401(k) plans and IRAs. You still owe federal tax on withdrawals from traditional (pre-tax) accounts.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Tennessee taxation of retirement income (Social Security, pensions, 401(k)/IRA): Tennessee Department of Revenue / Taxation.