Last Updated: April 2026
Tennessee eliminated its last vestige of state income tax in 2021 when the Hall Income Tax (which had taxed interest and dividends at 1–6% through a phase-out) was fully repealed. Tennessee now has zero state income tax of any kind. This makes Tennessee a compelling destination for in-migrants — which is exactly what has happened: Tennessee, particularly the Nashville metro and Williamson County suburbs, has experienced explosive population growth. This guide addresses what Tennessee residents (especially those in overheated Nashville) need to know if they are evaluating a departure, and what tax changes to expect from any move.
Tennessee's no-income-tax status has made it one of the fastest-growing states in the US. Nashville in particular has experienced dramatic growth — and with growth comes the drivers of out-migration:
Nashville home prices have risen approximately 60–80% from 2019 to 2024. Median home price in Nashville/Davidson County: approximately $430,000 (2024). A Tennessee remote worker who could have bought a home for $280,000 in 2019 now faces $430,000+ for the same property — a significant shift. Some long-term Nashville residents are moving to smaller Tennessee cities (Murfreesboro, Chattanooga, Knoxville) or to neighboring states (Alabama, Mississippi) for lower housing costs.
At 9.55% combined rate, Tennessee's sales tax is a real cost. A household spending $60,000 on taxable goods and services (excluding groceries partially) might incur $5,000–$5,700/year in Tennessee sales tax. This is higher than Florida (~7% combined), Texas (~8.25% combined), or Nevada (~8.23% combined). However, the sales tax burden doesn't typically drive interstate migration decisions on its own.
Tennessee's out-migrants typically move to Florida (warm climate, no income tax, lower property tax), Alabama and Mississippi (lower cost of living, no income tax), or back north for family and career reasons. The net migration pattern remains strongly positive for Tennessee — the state continues to attract more people than it loses.
Tennessee uses standard domicile-based residency. Since Tennessee has no income tax, the primary departure considerations are:
Tennessee has no income tax to report, so there is no state income tax return to file on departure. Former Tennessee residents with Tennessee rental property, business income, or other Tennessee-source income after departure do not owe Tennessee income tax (there is none). The only Tennessee-specific concern is proper transfer of vehicle registration and driver's license to the new state.
Tennessee levies a Franchise and Excise Tax on businesses operating in Tennessee. This is a business-level tax (not personal income tax) and continues to apply to Tennessee business operations regardless of owner residency. Tennessee business owners who move out of state while retaining Tennessee business operations should continue to meet Tennessee franchise/excise tax filing obligations.
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Tennessee Tax Help for US Expats →Both states have zero income tax and zero estate tax — so the income tax and estate tax comparison is a draw. The primary differences: Property tax: Tennessee (~0.66% effective) is lower than Florida (~0.91%) on a rate basis, but Florida's Homestead Exemption and Save Our Homes cap protect long-term Florida homeowners significantly. For a new buyer: $500,000 home in Tennessee = ~$3,300/year property tax; $500,000 home in Florida = ~$4,550/year without homestead. Tennessee wins on property tax for new buyers. Sales tax: Tennessee at 9.55% average vs Florida at ~7% — Florida is meaningfully lower. Healthcare access: both states have comparable private healthcare; Tennessee has no equivalent to Florida's concentration of retirement-focused medical facilities. Climate: Florida offers warmer winters; Tennessee offers four seasons with milder winters than the Northeast. For most retirees choosing between Tennessee and Florida, climate and proximity to family drive the decision more than the modest tax differences.
No — Tennessee has no state income tax of any kind, so Social Security is completely exempt from Tennessee taxation. This has been true throughout the Hall Income Tax era (the Hall Tax only applied to interest and dividends from investments, not to SS, wages, or retirement accounts) and continues after the Hall Tax repeal. Tennessee is one of the most favorable states for Social Security recipients along with the other no-income-tax states. A Tennessee retiree receiving $30,000 in Social Security benefits plus $40,000 in pension/IRA income pays $0 Tennessee income tax on any of it.
Both Tennessee and Texas have no state income tax. The main financial differences: Property tax: Texas (~1.63% effective) is significantly higher than Tennessee (~0.66%). A $500,000 home in Texas generates approximately $8,150/year in property tax vs $3,300 in Tennessee — a $4,850/year difference favoring Tennessee. Sales tax: Tennessee (9.55% average) vs Texas (8.25% average) — Texas is lower. Cost of living: Texas varies widely (Austin has risen sharply; San Antonio and Dallas remain more affordable); Nashville has risen significantly; secondary Tennessee cities (Chattanooga, Knoxville) remain affordable. Climate: Texas offers warmer weather but more extreme summers; Tennessee offers more moderate climate. For someone choosing between Texas and Tennessee for tax purposes, Tennessee wins on property tax and Texas wins on sales tax — but the property tax differential is larger in dollar terms for most homeowners.