Tennessee state income tax
Tennessee has no state individual income tax. Wages, self-employment income, capital gains, and retirement withdrawals are not taxed by Tennessee at the state level (federal tax still applies). The state funds itself through sales tax and property tax instead.
Does Tennessee have a state income tax?
No. Tennessee is one of the states with no individual income tax, so there is no state tax on your wages or salary. No individual income tax on wages or salaries. The Hall Tax (on interest and dividend income) was phased out and fully repealed for tax periods beginning on or after January 1, 2021, corrected from the collector's claim of January 1, 2022.
| Item | Tennessee |
|---|---|
| State income tax | None |
| Capital gains tax | None (no income tax) |
| State sales tax | 7% (plus local) |
| Avg. property tax rate | 0.52% of home value |
| Estate / inheritance tax | None |
How does Tennessee tax capital gains?
Tennessee does not tax capital gains, because it has no state income tax. You still owe federal capital gains tax. See how capital gains tax works in 2026.
What about retirement income in Tennessee?
Because Tennessee has no income tax, Social Security, pensions, and 401(k)/IRA withdrawals are all untaxed at the state level. See Tennessee retirement taxes for the full picture.
Sources
- Tennessee income tax: Tennessee Department of Revenue / Taxation.
- Tennessee capital gains treatment: Tennessee tax authority.
- Tennessee sales tax: Tennessee Department of Revenue.