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 - second-highest sales tax in US: Tennessee has 7% state sales tax + average 2.6% local = 9.61% average combined sales tax, second-highest in the US after Louisiana (10.11%). Memphis 9.75%, Nashville 9.25%, Chattanooga 9.25%. On $50K annual spending, that's $4,805/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 $9,561 CA state income tax vs ~$1,180 extra sales tax in TN - net savings $8,381/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 | $3,820 | $0 | $3,820 | $46,180 | 7.6% |
| $75,000 | $7,670 | $0 | $7,670 | $67,330 | 10.2% |
| $100,000 | $13,170 | $0 | $13,170 | $86,830 | 13.2% |
| $150,000 | $24,734 | $0 | $24,734 | $125,266 | 16.5% |
| $250,000 | $51,304 | $0 | $51,304 | $198,696 | 20.5% |
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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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 | 3.5% flat | $3,382 | +$3,382 (more tax) |
| Georgia | 4.99% flat | $4,242 | +$4,242 (more tax) |
| North Carolina | 3.99% flat | $3,481 | +$3,481 (more tax) |
| Virginia | 2-5.75% | $4,936 | +$4,936 (more tax) |
Key insight: Tennessee's 0% income tax saves residents $3,382-$4,936/year at $100K income vs KY, GA, NC and VA. At $150K, savings are $5,132-$7,811/year. At $250K, savings reach $8,632-$13,561/year. Tennessee and Florida are the Southeast's no-income-tax states.
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 (9.61%) 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 + ~2.6% local = 9.61% average combined (second-highest in US after Louisiana), generating $10B+ annually from residents and tourism, (2) Property tax: 0.52% average, (3) Franchise & excise tax: 6.5% excise tax on net earnings (plus a franchise tax on net worth) for most corporations, LLCs and limited partnerships, (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 2.6% local = 9.61% average combined, second-highest in US after Louisiana. Nashville 9.25%, Memphis 9.75%, Chattanooga 9.25%, Knoxville 9.25%. On $50K annual spending, that's $4,805/year in sales tax vs $3,625 in a 7.25% state like California ($1,180 extra). However, at $150K income, you'd pay $9,561 CA state income tax vs $1,180 extra TN sales tax - net savings $8,381/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 6.98% avg vs TN 9.61% - FL saves $1,315/year on $50K spending. Property tax: FL 0.78% vs TN 0.52% - TN saves $1,092/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, (5) Moderate property tax 0.52% (lower than FL 0.78%, much lower than TX 1.40%). At typical retiree income ($50K SS + $30K pension = $80K): pay $0 TN state tax vs $0 in Georgia (pension fully covered by Georgia's $65K retirement exclusion for retirees 65+), about $690 in North Carolina (3.99% on the $30K pension after its standard deduction; Social Security is not taxed there), while California taxes pension and IRA income at its progressive rates (Social Security is exempt there). Only catch: 9.61% average sales tax on spending. Budget $4,000-5,000/year sales tax on $50K spending. Still saves money vs most neighboring income-tax states for retirees with taxable pension or investment income.
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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 ($16,100 for single filers in 2026), and calculate effective tax rates. For comparison purposes, we show sales tax rates (9.61% average, 9.25-9.75% in major cities) and property tax averages (0.52% 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 for tax periods beginning on or after January 1, 2021) verified against the Tennessee Department of Revenue Hall income tax page. 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 businesses (6.5% excise tax on net earnings plus franchise tax on net worth). 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 corporations, LLCs and limited partnerships doing business in Tennessee), part-year residency (establish TN domicile to avoid other states' income tax), property tax variations across TN counties, sales tax planning for major purchases.
Last Updated: March 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: March 2026