Tennessee Income Tax Calculator

Taxes in Tennessee

Tennessee State Tax Quick Facts

• Income tax: None
• Sales tax: 7.00% - 9.75%
• Property tax: 0.56% average effective rate
• Gas tax: 26 cents per gallon of regular gasoline, 27 cents per gallon of diesel

Tax day is a time for celebration in the Volunteer State, as the state has no taxes on salaries and wages. On the other hand, a trip to the mall might be cause to sing the blues. Tennessee has the highest overall sales tax in the country, with combined state and local rates of 9.55%. Tennessee also has the highest beer tax in the nation at $1.29 per gallon.

On the other hand, Tennessee homeowners probably aren’t crying over the state’s property taxes, which have an average effective rate of 0.56%, ninth-lowest in the country.

A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Tennessee Income Taxes

Tennessee has no state income tax on salaries, wages, bonuses or any other type of work income. Although the state used to tax income earned from interest and dividends, it has repealed this starting with the 2021 tax year. This was called the “Hall Income Tax,” since it was named after the Tennessee state senator who sponsored the legislation in 1929.

Tennessee Sales Tax

The statewide base sales tax in Tennessee is 7%, which by itself is tied for the second-highest statewide rate in the nation. However, cities and counties can collect additional sales taxes, with local rates ranging from 1.50% to 2.75%. The table below shows the combined state and local rates for every county and the largest cities in Tennessee.

Sales tax is collected on sales of tangible personal property (which includes things like jewelry, books, computer software and clothing) as well as some services. Among the types of services that are taxable are hotel or motel room rentals, parking garages, repair services (of cars, computers, etc.), installations and laundry.

Food has its own set of rules. While prepared food is taxed at the normal rate, most types of food that can be purchased at a grocery store are subject to a lower, statewide rate of 4% plus local taxes. Candy and dietary supplements, however, are not considered food and face the full sales tax rate.

Single purchases with a price of over $1,600 are subject to additional taxes. The total state and local rates listed in the table above apply to the first $1,600 of the purchase. The next $1,600 of the purchase is taxed at 9.75%. Finally, for any portion of the purchase price exceeding $3,200, a lower rate of 7% is applied.

While Tennessee has the highest sales tax rates in the country, the state does offer taxpayers one brief respite. The Tennessee sales tax holiday begins on the last Friday in July and lasts the entire weekend. Throughout that weekend, no sales tax is due on clothing items and school supplies with prices less than $100 per item and computers priced up to $1,500.

Tennessee Property Tax

Homeowners in Tennessee pay some of the lowest property taxes in the country. The median amount of property tax paid statewide is $1,317 per year. That adds up to an effective property tax rate of 0.56%, which is the ninth-lowest effective rate in the U.S.

This rate ranges significantly depending on where you live. Rates are highest in Shelby County, at about 1.42%, and lowest in Pickett County, at less than 0.37%.

Local property taxes are just one of the many things to consider if you’re thinking about purchasing a home. Check out our Tennessee mortgage guide for information about mortgage rates in Tennessee and details specific to each county.

Tennessee Inheritance and Estate Tax

The estate tax in Tennessee was fully repealed in 2016.

Tennessee Professional Privilege Tax

Professionals in certain occupations are required to pay an annual $400 fee in Tennessee. The professions subject to this tax are attorneys, securities agents, broker-dealers, investment advisers, lobbyists, osteopathic physicians and physicians.

Tennessee Alcohol Tax

Tennessee’s tax on alcoholic beverages is $4.40 per gallon of spirits and $1.21 per gallon of wine. Beer faces both an excise tax of $36.50 per barrel and a wholesale rate of 15%, which totals $1.29 per gallon. That’s the highest beer tax in the nation.

Tennessee Gas Tax

The Tennessee gas tax is equal to 2 cents per gallon of regular gasoline and 27 cents per gallon of diesel .

• The Great Smoky Mountain National Park, which is headquartered in Eastern Tennessee, is the most visited national park in the U.S.
• The two largest cities in Tennessee are Memphis and Nashville. Both are known for their influential music scenes.