Tennessee State Tax Guide

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 The state previously taxed income earned from stocks and bonds, but this tax was repealed in 2021.

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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

Source: Sales Tax Handbook

Tennessee alcohol taxes

Source: Sales Tax Handbook

Tennessee estate and inheritance taxes

There is no estate tax or inheritance tax in Tennessee.

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