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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Tennessee VS COUNTRY B Colorado

Side-by-side analysis of income tax, effective rates, and take-home pay for Tennessee and Colorado in 2026.

Daniel · CountryTaxCalc Updated June 2026 Tax Comparison 2026
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OVERVIEW
Tennessee and Colorado represent two of America's most rapidly growing metros — Nashville and Denver — with sharply different tax philosophies. Tennessee has 0% income tax (Hall Tax repealed 2021) but the highest combined sales tax in the US (~9.55%), and a low property tax (~0.52%). Colorado charges a 4.4% flat income tax, partially offset by constitutional TABOR refunds (~$800/filer annually), with very low property tax (~0.55%). At $100,000 income with a $300,000 home, Tennessee leads by approximately $3,075/year: the income tax saving ($3,600 net after TABOR) outweighs Tennessee's higher sales tax burden (~$615 more), with property tax now also slightly favoring Tennessee (~$90 less). At $200,000 income, Tennessee's advantage grows to approximately $7,330/year as the income tax gap widens while property and sales tax differentials remain constant. However, at lower incomes ($50,000) where the income tax gap is smaller, Tennessee's high sales tax narrows the difference to approximately $1,061/year, only partly offset by Tennessee's now slightly lower property tax. For high earners and investors, Tennessee's 0% income tax is a compelling advantage over Colorado. For moderate-income households who spend heavily on taxable goods, Tennessee's notorious sales tax burden is the key risk.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

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COUNTRY A
Tennessee
TAX RATE
0%
No Income Tax — But Highest Combined Sales Tax in the US

No income tax on wages or investment income (Hall income tax fully repealed January 1, 2021); no capital gains tax; 7% state sales tax (~9.55% combined average — the highest in the US); property tax ~0.52% average; no estate tax

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COUNTRY B
Colorado
TAX RATE
4.4%
Flat Income Tax — TABOR Refunds Partially Offset; Very Low Property Tax

4.4% flat income tax on all income; TABOR refunds ~$800/filer annually in recent years; 2.9% state sales tax (~7.5% combined average); property tax ~0.55% average; no estate tax; capital gains taxed as ordinary income at 4.4%

TYPICAL ANNUAL DIFFERENCE
Moving from Colorado → Tennessee at Net annual Tennessee advantage vs Colorado at $50K–$300K (income tax saving plus property tax edge minus sales tax premium; TABOR ~$800 offsets part of CO income tax)
$1,061–$11,585 net

That's $88–$965/month net at $50K–$300K income back in your pocket

Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.

GROSS INCOME
🎸 TN TAX
🏔️ CO TAX
SAVINGS
10-YEAR
$50,000
$0 income tax; ~$1,222 property (0.52% × $235K home); ~$1,910 sales (9.55% × $20K) = ~$3,132 total
~$2,200 income tax (4.4%); −~$800 TABOR = ~$1,400 net; ~$1,293 property (0.55% × $235K home); ~$1,500 sales (7.5% × $20K) = ~$4,193 total
TN saves ~$1,400 net CO income tax; saves ~$71 more on property tax; pays ~$410 more sales = ~$1,061 net TN advantage at $50K
$10,610
$100,000
$0 income tax; ~$1,560 property (0.52% × $300K home); ~$2,865 sales (9.55% × $30K) = ~$4,425 total
~$4,400 income tax (4.4%); −~$800 TABOR = ~$3,600 net; ~$1,650 property (0.55% × $300K home); ~$2,250 sales (7.5% × $30K) = ~$7,500 total
TN saves ~$3,600 net CO income tax; saves ~$90 more on property tax; pays ~$615 more sales = ~$3,075 net TN advantage at $100K
$30,750
$200,000
$0 income tax; ~$2,600 property (0.52% × $500K home); ~$3,820 sales (9.55% × $40K) = ~$6,420 total
~$8,800 income tax (4.4%); −~$800 TABOR = ~$8,000 net; ~$2,750 property (0.55% × $500K home); ~$3,000 sales (7.5% × $40K) = ~$13,750 total
TN saves ~$8,000 net CO income tax; saves ~$150 more on property tax; pays ~$820 more sales = ~$7,330 net TN advantage at $200K
$73,300
$300,000
$0 income tax; ~$3,640 property (0.52% × $700K home); ~$4,775 sales (9.55% × $50K) = ~$8,415 total
~$13,200 income tax (4.4%); −~$800 TABOR = ~$12,400 net; ~$3,850 property (0.55% × $700K home); ~$3,750 sales (7.5% × $50K) = ~$20,000 total
TN saves ~$12,400 net CO income tax; saves ~$210 more on property tax; pays ~$1,025 more sales = ~$11,585 net TN advantage at $300K
$115,850
$500K capital gain
$0 state capital gains tax (Tennessee: no income or capital gains tax after Hall Tax repeal)
~$22,000 Colorado state capital gains tax (CO taxes capital gains as ordinary income at 4.4%; TABOR does not reduce capital gains tax)
TN saves ~$22,000 on a $500K capital gain event vs Colorado
Depends on frequency; TN's property tax is now slightly below Colorado's — TN saves an additional ~$71–$210/year in property tax depending on home value
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Tennessee Pros & Cons

+ PROS
  • No income tax — Tennessee repealed its last income tax (Hall Tax on interest and dividends) effective January 1, 2021; all wages, salaries, investment income, and capital gains are tax-free at the state level; Colorado charges 4.4% flat; at $200,000 income, TN saves approximately $8,000 net (after TABOR)
  • No capital gains tax — Tennessee charges $0; Colorado taxes capital gains as ordinary income at 4.4%; a $500,000 gain saves approximately $22,000 vs Colorado
  • Low property tax — Tennessee's ~0.52% is below the national average and now slightly below Colorado's ~0.55%; the property tax gap is small (Tennessee pays approximately $90 less on a $300K home)
  • Nashville's booming economy — Nashville is one of the fastest-growing US cities with healthcare (HCA Healthcare, Vanderbilt), music, finance, and an expanding tech sector; career density rivals Denver for many sectors
− CONS
  • Highest combined sales tax in the US — Tennessee's ~9.55% combined average is the highest of any US state; Colorado's ~7.5% is notably lower; on $40,000/year of taxable spending, Tennessee costs approximately $820/year more than Colorado; this significantly offsets TN's income tax advantage at lower income levels
  • High sales tax is regressive — Tennessee's high sales tax falls disproportionately on lower-income households who spend a larger share of income on taxable goods; Colorado's lower sales tax is less burdensome for moderate-income households
  • No outdoor recreation access comparable to Colorado — Denver's direct access to major ski resorts, hiking, and Rocky Mountain recreation is a primary lifestyle advantage over Tennessee's Smoky Mountain-adjacent cities
🏔️

Colorado Pros & Cons

+ PROS
  • Comparable, low property tax — Colorado's ~0.55% is among the lower effective rates in the US, though now marginally above Tennessee's ~0.52%; both states offer relatively low property tax burdens for homeowners versus the national average
  • TABOR refunds reduce income tax burden — Colorado returns approximately $800/filer per year, reducing the net income tax from 4.4% to effectively lower; at $50,000 income, TABOR reduces the gap with Tennessee significantly
  • Denver's Rocky Mountain lifestyle — direct ski access, hiking, biking, and the Rocky Mountain outdoors from Denver is unmatched; for outdoor-lifestyle-driven relocators, Colorado is a primary destination in ways Tennessee is not
  • Lower combined sales tax — Colorado's ~7.5% is significantly below Tennessee's ~9.55%; on $30,000/year of spending, approximately $615/year less than Tennessee — meaningful for high-spending households
− CONS
  • 4.4% flat income tax on all income — Colorado residents pay 4.4% from the first dollar; TABOR returns ~$800 flat annually; at $300,000 income, net income tax is approximately $12,400/year; Tennessee residents pay $0
  • Capital gains taxed as ordinary income — Colorado taxes all capital gains at 4.4% with no preferential rate; Tennessee charges $0; a $500,000 gain costs approximately $22,000 in Colorado state tax
  • TABOR refund is not proportional — the ~$800 TABOR refund is identical at $50,000 and $300,000 income; at high incomes it becomes a tiny fraction of the income tax bill
  • Higher sales tax than national average — Colorado's ~7.5% combined rate is above the national average (~7.1%) despite being below Tennessee; the sales tax advantage vs TN does not make Colorado a low-sales-tax state overall
FAQ

Frequently Asked Questions

Does Tennessee have an income tax?

No. Tennessee repealed its last income tax — the Hall Income Tax on interest and dividends — effective January 1, 2021. Prior to that, Tennessee taxed investment income at 3%. As of 2021, Tennessee has 0% state income tax on wages, salaries, investment income, and capital gains. Tennessee does have the highest combined sales tax in the US (~9.55%), which partially offsets the income tax elimination.

What is Colorado's TABOR refund?

Colorado's Taxpayer's Bill of Rights (TABOR) is a constitutional provision requiring excess state revenues to be refunded to income tax filers, approximately $800/person annually in recent years. This reduces Colorado's effective 4.4% income tax: at $100,000 income, gross income tax is $4,400, net after TABOR is approximately $3,600. At higher incomes, the $800 TABOR becomes proportionally negligible — a $300,000 earner's $13,200 income tax bill is reduced by only 6%.

How do sales taxes compare between Tennessee and Colorado?

Tennessee has the highest combined state and local sales tax in the US at approximately 9.55% average. Colorado's combined rate is approximately 7.5%. On $30,000/year of taxable spending: Tennessee costs approximately $2,865; Colorado approximately $2,250 — a difference of approximately $615/year more in Tennessee. Tennessee applies a reduced 4% state rate to food and groceries, which partially narrows the gap for food-heavy budgets.

Is Tennessee or Colorado better for Nashville vs Denver movers?

Nashville and Denver offer comparable urban career ecosystems in different sectors. Nashville leads in healthcare, music, and finance; Denver leads in aerospace, tech, and outdoor recreation industry. On taxes, Tennessee wins at $100K+ income: the income tax saving ($3,600 net after TABOR) outweighs Tennessee's higher sales tax burden, with property tax now also slightly favoring Tennessee. Denver's outdoor lifestyle and Rocky Mountain access are lifestyle advantages Tennessee cannot match.

How do property taxes compare between Tennessee and Colorado?

Tennessee's effective property tax rate (~0.52%) is now slightly lower than Colorado's (~0.55%). On a $400,000 home: Tennessee costs approximately $2,080/year; Colorado approximately $2,200/year — a difference of approximately $120/year, with Colorado the marginally higher-property-tax state of the two. Both states are below the national average property tax rate. This relatively small difference means property tax is not a major factor in the Tennessee vs Colorado comparison — it's dominated by income tax vs sales tax trade-offs.

Is Tennessee or Colorado better for retirees?

Tennessee is financially superior for retirees with investment income or capital gains: 0% vs Colorado's 4.4%. Tennessee exempts Social Security from state income tax. For retirees spending modestly on taxable goods, Tennessee's high sales tax is the main risk; Colorado's lower sales tax (~7.5% vs TN's ~9.55%) benefits retirees who spend heavily on taxable goods. Property tax is not a differentiator for retiree home ownership — the two states are close (CO ~0.55% vs TN ~0.52%). At $80,000 retirement income, Tennessee saves approximately $2,720 in income tax but pays approximately $410 more in sales tax — a clear Tennessee net advantage.
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