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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Tennessee VS COUNTRY B Virginia

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

Daniel · CountryTaxCalc Updated October 2026 Income tax verified October 2026 Tax Comparison 2026
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OVERVIEW
Tennessee eliminated all income taxes in 2021 when the Hall Tax on investment income was fully repealed, making it a pure 0% income tax state. Virginia taxes most income at an effective rate of 5.75% (the top bracket applies to taxable income above just $17,000). A $100,000 earner saves $4,936 per year in Tennessee. The key trade-off: Tennessee compensates with a higher sales tax (up to 9.75% combined, and a 4% state tax plus local tax on groceries), while Virginia has lower sales tax (5.3% in most places, 6% in Northern Virginia, Hampton Roads and Central Virginia, 7% in the Historic Triangle) and taxes groceries at only 1%. Neither state has an estate or inheritance tax.
Section 01

The Big Picture

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

🎸
COUNTRY A
Tennessee
TAX RATE
0%
No Income Tax

Hall Tax on dividends/interest fully repealed 2021; no wage or salary income tax

🏛️
COUNTRY B
Virginia
TAX RATE
2-5.75%
Progressive (5.75% over $17K)

Effectively 5.75% on most taxable income above $17,000; no local income tax surcharge

TYPICAL ANNUAL DIFFERENCE
Moving from Virginia → Tennessee at $100,000
$4,936

That's $411/month 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
🏛️ VA TAX
SAVINGS
10-YEAR
$50,000
$0
$2,061
$2,061
$20,610
$75,000
$0
$3,498
$3,498
$34,980
$100,000
$0
$4,936
$4,936
$49,360
$150,000
$0
$7,811
$7,811
$78,110
$250,000
$0
$13,561
$13,561
$135,610
$500,000
$0
$27,936
$27,936
$279,360
💡

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🎸

Tennessee Pros & Cons

+ PROS
  • 0% income tax on all wages, salaries, retirement income, and dividends/interest
  • No state estate tax or inheritance tax
  • Lower cost of living vs Northern Virginia/DC suburbs
  • Nashville is a rapidly growing business hub with diverse economy
− CONS
  • High combined sales tax up to 9.75% — among the highest in the USA
  • 4% state grocery tax plus local tax (up to 6.75% combined; most states exempt groceries or tax at lower rates)
  • Weaker public schools vs Northern Virginia’s nationally ranked districts
  • Limited public transit infrastructure outside Nashville
🏛️

Virginia Pros & Cons

+ PROS
  • Lower sales tax (5.3% in most places, up to 7%) and only a 1% tax on groceries
  • Strong job market especially in Northern Virginia (federal contractors, tech, defence)
  • Excellent public schools particularly in Fairfax and Arlington counties
  • No estate or inheritance tax
− CONS
  • Effective 5.75% income tax rate on nearly all taxable income above $17,000
  • Costs $2,061-$27,936/year more in income tax vs Tennessee across income levels
  • Northern Virginia has very high cost of living (among most expensive in the South)
  • Virginia’s top bracket starts at just $17,001 of taxable income — most income is taxed at the maximum rate
FAQ

Frequently Asked Questions

Does Tennessee really have zero income tax?

Yes. Tennessee fully repealed the Hall Tax on interest and dividends in January 2021. Tennessee now levies no income tax on wages, salaries, retirement income, Social Security, or investment income. It is one of nine states that do not tax wage income as of 2026. The trade-off is a high combined sales tax (7% state + local = up to 9.75%) and a 4% state tax (plus local tax) on groceries.

What is Virginia’s income tax rate in practice?

Virginia’s tax brackets, applied to taxable income, are: 2% on the first $3,000, 3% on $3,001-$5,000, 5% on $5,001-$17,000, and 5.75% above $17,000. Because the top bracket starts at just $17,001 of taxable income, virtually all income above that is taxed at 5.75%. A $100,000 earner effectively pays about 4.9% of gross income in Virginia state income tax, totalling roughly $4,936.

Does Virginia tax groceries?

Only at a reduced rate. Virginia taxes food for home consumption at 1% statewide (the state portion was eliminated on 1 January 2023; the 1% local tax remains). Tennessee, by contrast, charges a 4% state sales tax on groceries (reduced from the standard 7%) plus a local rate of up to 2.75%. For a family spending $10,000/year on groceries, Tennessee’s grocery tax adds roughly $300 to $575/year more than Virginia’s 1% ($400-$675 in Tennessee versus $100 in Virginia).

Which state is better for retirees — Tennessee or Virginia?

Tennessee is generally better for retirees on a tax basis. Tennessee has 0% income tax on all retirement income including pensions, 401(k)/IRA withdrawals, Social Security, and dividends. Virginia taxes most retirement income at up to 5.75%, though it lets you subtract Social Security and offers an Age Deduction of up to $12,000 for those 65+ that is income-tested: for single filers it is reduced $1 for every $1 of adjusted federal AGI above $50,000, so it is fully phased out at $62,000. A single retiree with $80,000 of federal AGI from pensions and IRA withdrawals (no Social Security) would pay roughly $3,740 in Virginia state income tax after the standard deduction, the personal exemption and the extra $800 exemption for age 65+, versus $0 in Tennessee. Neither state has an estate or inheritance tax.
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