Tennessee state tax: Overview
Although Tennessee has one of the highest sales tax rates in the U.S., relatively low property taxes compared to other states, Tennessee has no income taxes, and a generally low cost of living.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Tennessee income tax
There is no income tax in Tennessee. The state previously taxed income earned from stocks and bonds, but this tax was repealed in 2021.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tennessee sales tax
Tennessee has a 7% statewide sales tax. There's also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined state and local rate of 9.55%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Prescription drugs: Taxable
- Motor Vehicles: Taxable
How much are property taxes in Tennessee?
Tennessee's property tax rate is below the national average. The average effective property tax rate in Tennessee is 0.48%, according to the Tax Foundation.
Tennessee Property Tax Breaks for Retirees
Property Tax Relief Program: Tennessee has a property tax relief program that reimburses income-eligible adults age 65 or older for taxes paid on their primary residence.
Note: Veterans with disabilities and their surviving spouses (of any age) might also qualify for the Tennessee property tax relief program.
Property Tax Freeze: There's also a property tax freeze program available for eligible Tennessee residents. If approved, homeowners can have their tax-assessed value frozen, preventing tax increases in following years. Homeowners must meet specific criteria to qualify.
- Age 65 or older by the end of the tax year in which the application is filed
- Own the primary residence in a participating Tennessee county or city
- Income must not exceed county limits. (Income limits can change each year.)
Tennessee gas tax
Gasoline: $0.20 per gallon.
Diesel: $0.17 per gallon.
Source: Sales Tax Handbook
Tennessee taxes on alchohol and tobacco
Tennessee tobacco taxes
| Product | Tax Amount |
|---|---|
| Cigarette | $0.62 per pack |
| Other Tobacco Products | 6.60% of wholesale price |
Source: Sales Tax Handbook
Tennessee alcohol taxes
| Product | Tax Amount |
|---|---|
| Wine | $1.21 per gallon |
| Beer | $1.29 per gallon |
| Liquor | $4.40 per gallon |
Source: Sales Tax Handbook
Tennessee estate and inheritance taxes
There is no estate tax or inheritance tax in Tennessee.
Related Content
-
Retire in Costa Rica With These Three Tax BenefitsRetirement Taxes Costa Rica may be a good place for retirement if you like the low cost of living and savings for your heirs.
-
Five Ways to Ease Caregiver StressCaregiver stress is real. Here are five techniques to protect your health and happiness while caring for a loved one.
-
Retire in Costa Rica With These Three Tax Benefits
Retirement Taxes Costa Rica may be a good place for retirement if you like the low cost of living and savings for your heirs.
-
Ten IRS Audit Red Flags for Self-Employed IndividualsIRS Audits Taxpayers who file Schedule C with their Form 1040 have a greater chance of an IRS audit
-
Trump Wants You Out of the IRS, But You'll Have to Wait Until MayIRS Some IRS employees won’t be able to resign using the buyout offer until the end of tax season.
-
Are Tips Taxable in 2025? Understanding the IRS RulesTaxable Income With all the recent talk about ending federal taxes on tips, some wonder whether tips are taxable income.
-
What's Going on With New Jersey Property Tax Programs?Property Tax ANCHOR and ‘Senior Freeze’ just got a refresh, and there’s a new program: Stay NJ. Learn how to save on New Jersey property taxes.
-
States That Won't Tax Your Retirement Income in 2025Retirement Taxes Several states don’t tax Social Security benefits, 401(k)s, IRAs, and pensions. But you may still have to pay state taxes on some incomes.
-
Navigating 1099s: A Guide to All 22 IRS Tax Forms to KnowTax Filing You should receive your 1099 form by February 15. But what happens next?
-
Five States With the Largest EITC ChecksEITC Households in these states received a larger Earned Income Tax Credit (EITC) last year.
