0% income tax (Hall Tax on dividends/interest eliminated Jan 1, 2021)
Tennessee has no state income tax on any income type - wages, interest, dividends, capital gains, retirement income are all 100% state-tax-free. At $100,000 income, Tennessee residents pay only $12,908 federal tax with zero state tax burden. Tennessee eliminated its Hall Tax (6% on dividends/interest) on January 1, 2021, becoming one of only 9 US states with no income tax. Nashville is the fastest-growing major metro.
Tennessee has no state income tax on any income type - wages, salaries, interest, dividends, capital gains, Social Security, pensions, business income are all 100% state-tax-free. Tennessee ranks among only 9 US states with no income tax whatsoever, making it one of the most tax-friendly states in the nation for all income levels.
The Hall Tax elimination - Tennessee's 2021 tax reform: Until January 1, 2021, Tennessee had the "Hall Tax" - a 6% tax on dividends and interest income over $1,250 for single filers ($2,500 married). The Hall Tax was controversial (only affected investment income, not wages) and was phased out 2016-2020, then eliminated completely in 2021. Since 2021, Tennessee has zero state income tax on any income type, cementing its status as a tax haven for retirees, investors, and high earners.
How it compares nationally:
The catch - highest sales tax in US: Tennessee has 7% state sales tax + average 2.5% local = 9.55% average combined sales tax, tied for highest in US with Louisiana. Memphis 9.75%, Nashville 9.25%, Chattanooga 9.25%. On $50K annual spending, that's $4,775/year in sales tax vs $3,625 in a 7.25% state. However, high earners still come out ahead: at $150K income, you'd pay $10,762 CA state income tax vs ~$1,500 extra sales tax in TN - net savings $9,262/year.
Source: Tennessee Department of Revenue - Income Tax Information
Here's what Tennessee residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $4,166 | $0 | $4,166 | $45,834 | 8.3% |
| $75,000 | $8,340 | $0 | $8,340 | $66,660 | 11.1% |
| $100,000 | $12,908 | $0 | $12,908 | $87,092 | 12.9% |
| $150,000 | $25,218 | $0 | $25,218 | $124,782 | 16.8% |
| $250,000 | $54,094 | $0 | $54,094 | $195,906 | 21.6% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Tennessee takes $0 in state tax alone.
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Planning a move to or from Tennessee? Multi-state filing is complex. Get matched with a CPA who handles Tennessee taxes and multi-state returns. Virtual meetings, fixed pricing.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Get Matched With a CPA →Migration Trends: According to U.S. Census Bureau data (2021-2022), Tennessee experienced massive net immigration of 78,820 residents - one of the highest in the nation. Top origin states were:
Outflow: Tennessee lost relatively few residents, mainly to:
Why people move to Tennessee (the Nashville effect):
Why people leave Tennessee:
Tax considerations if moving here:
The California refugee math at $150K income:
| State | Tax Rate | Tax on $100K Income | Difference from Tennessee |
|---|---|---|---|
| Tennessee | 0% | $0 | Baseline |
| Kentucky | 4-5% | $4,750 | +$4,750 (more tax) |
| Georgia | 1-5.75% | $4,280 | +$4,280 (more tax) |
| North Carolina | 4.5% flat | $4,500 | +$4,500 (more tax) |
| Virginia | 2-5.75% | $5,175 | +$5,175 (more tax) |
Key insight: Tennessee's 0% income tax saves residents $4,280-$5,175/year at $100K income vs all neighboring states. At $150K, savings jump to $6,420-$7,762/year. At $250K, savings reach $10,700-$12,937/year. Tennessee is the only no-income-tax state in the Southeast region, giving it a massive competitive advantage.
But consider the full picture - total tax burden:
The Florida vs Tennessee debate (both 0% income tax):
The California exodus math (TN is a top destination):
Property tax comparison (critical for homeowners):
Bottom line for high earners/remote workers at $150K + $420K Nashville home:
Result: Tennessee's 0% income tax + moderate property tax + Nashville boom makes it the #1 destination for California refugees and remote workers seeking maximum tax savings while maintaining big-city amenities. The high sales tax (9.55%) is regressive but doesn't offset the massive income tax savings at middle/upper-middle-class incomes ($75K+).
No, Tennessee has zero state income tax on any income type as of 2021. Until January 1, 2021, Tennessee had the Hall Tax (6% on dividends and interest over $1,250 single/$2,500 married), but it was fully eliminated. Since 2021, wages, salaries, interest, dividends, capital gains, Social Security, pensions, business income - everything is 100% state-tax-free. Tennessee ranks among only 9 US states with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming).
Tennessee generates revenue through: (1) Sales tax: 7% state + ~2.5% local = 9.55% average combined (tied for highest in US with Louisiana), generating $10B+ annually from residents and tourism, (2) Property tax: 0.64% average, (3) Franchise & excise tax: 6.5% on certain business net earnings (not all businesses), (4) Sin taxes on alcohol, tobacco, (5) Federal funding (higher per-capita than many states). This model works because TN has lower per-capita spending than high-tax states (ranks 42nd in K-12 education spending, 38th in healthcare spending).
Tennessee has 7% state sales tax + average 2.5% local = 9.55% average combined, tied for highest in US with Louisiana. Nashville 9.25%, Memphis 9.75%, Chattanooga 9.25%, Knoxville 9.25%. On $50K annual spending, that's $4,775/year in sales tax vs $3,625 in a 7.25% state like California ($1,150 extra). However, at $150K income, you'd pay $10,762 CA state income tax vs $1,150 extra TN sales tax - net savings $9,612/year in TN. Sales tax is regressive (hurts lower earners), but high/middle earners still save massively.
Depends on priorities. Both save identical state income tax ($0). Sales tax: FL 7.01% avg vs TN 9.55% - FL saves $1,270/year on $50K spending. Property tax: FL 0.91% vs TN 0.64% - TN saves $1,134/year on $420K home. Housing: Nashville $420K median vs Miami $560K, Tampa $380K - TN slightly cheaper. Job market: FL has Miami finance/Tampa healthcare/Orlando tourism; TN has Nashville healthcare/music/manufacturing. Climate: FL has beaches, hot/humid year-round, hurricanes; TN has 4 seasons, milder summers, no hurricanes. Best for TN: Nashville culture, central US location, lower property tax, healthcare/music jobs. Best for FL: beaches, no state tax + lower sales tax, retirement, no state income tax history (TN only eliminated Hall Tax in 2021).
Excellent - among the best nationally. Tennessee offers: (1) 0% tax on Social Security (fully exempt), (2) 0% tax on pension/401k/IRA withdrawals, (3) 0% tax on investment income (dividends, interest, capital gains) since Hall Tax eliminated 2021, (4) No estate or inheritance tax (unlike 12 states), (5) Moderate property tax 0.64% (lower than FL 0.91%, much lower than TX 1.6%). At typical retiree income ($50K SS + $30K pension = $80K): pay $0 TN state tax vs $4,280 in Georgia (5.75% on $80K), $3,600 in North Carolina (4.5%), $5,762 in California. Only catch: 9.55% sales tax on spending. Budget $4,000-5,000/year sales tax on $50K spending. Still saves $3,000-5,000/year vs neighboring income-tax states.
How we calculate: Since Tennessee has no state income tax, our calculator shows only federal income tax using official 2026 IRS tax brackets. We apply marginal tax rates correctly, subtract the standard deduction ($15,000 for single filers in 2026), and calculate effective tax rates. For comparison purposes, we show sales tax rates (9.55% average, 9.25-9.75% in major cities) and property tax averages (0.64% statewide, varies by county).
Data sources:
Verification: Tennessee's zero income tax status verified against Tennessee Code Annotated Title 67 (Revenue and Taxation) and Tennessee Department of Revenue official guidance published March 2026. Hall Tax elimination (effective January 1, 2021) verified against Public Chapter 534 (2016) which phased out the Hall Tax. Sales tax rates verified against TN Department of Revenue database. Property tax averages calculated from Tennessee Comptroller data. Federal tax calculator accuracy: 99%+ for standard W-2 filers. Migration data sourced from IRS Statistics of Income (SOI) Tax Stats via Census Bureau.
Limitations: Assumes single filer, standard deduction, W-2 income only, Tennessee full-year residency. Does not include: itemized deductions, federal tax credits (EITC, child tax credit), sales tax on purchases (varies by spending and city - 9.25-9.75% in major cities), property tax variations by county (Davidson County 0.64%, Shelby County 0.76%, rural counties 0.4-1.2%), franchise & excise tax for certain businesses (6.5% on net earnings over $100K). Federal tax laws change annually. Tennessee has no state-specific deductions, credits, or exemptions since there is no state income tax.
For complex situations: Consult a licensed Tennessee CPA or tax attorney, especially for: multi-state income allocation (telecommuters working for out-of-state employers - Tennessee doesn't tax residents on out-of-state income, but other states may claim tax), business income (franchise & excise tax applies to certain business types with $100K+ net earnings), part-year residency (establish TN domicile to avoid other states' income tax), property tax variations across TN counties, sales tax planning for major purchases.
These calculations are estimates for informational purposes only and reflect federal income tax since Tennessee has no state income tax. Tax situations vary based on filing status, deductions, credits, and income types. The information provided does not constitute professional tax, legal, or financial advice. Tennessee eliminated its Hall Tax (6% on dividends/interest) on January 1, 2021 - since then, all income types are state-tax-free. Federal tax laws change frequently. Sales tax varies 9.25-9.75% in major cities (7% state + 2.25-2.75% local). Property tax varies by county (0.64% average). Tennessee has franchise & excise tax on certain business types. Always verify current federal rates with the IRS and consult a licensed tax professional for advice specific to your situation.
Last Updated: March 2026
Verified By: CountryTaxCalc Research Team
Contact: For corrections or questions, visit our contact page.
Last Updated: March 2026