Tennessee has taxed no form of personal income since 2021, when the last remnant of the Hall income tax was phased out completely.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
|---|
For most of its history Tennessee was a partial no-income-tax state: wages were exempt, but the Hall income tax applied to interest and dividend income. A phase-out was legislated and the rate reached zero for tax years beginning January 2021.
That distinction still matters when reading older guidance. Any article describing Tennessee as taxing investment income is out of date. Today the state takes nothing from wages, interest, dividends or capital gains.
Tennessee levies a flat annual professional privilege tax on holders of certain state licences. It was repealed for most of the professions it once covered, but it was not abolished — it continues to apply to a narrow remaining set, including attorneys, lobbyists, securities agents and investment advisers.
It is a fixed annual amount rather than a percentage of income, so it lands identically on a first-year lawyer and a partner. It is not withheld from your paycheck and it does not appear on a pay stub, which is exactly why people in the affected professions are caught out by it in their first year in the state.
If you hold one of those licences, budget for it separately. If you do not, Tennessee genuinely takes nothing from your income.
Tennessee funds itself through consumption. The state sales tax rate is 7%, and local rates add up to 2.75% on top, producing one of the highest average combined rates in the United States at roughly 9.5%.
Groceries are taxed, though at a reduced rate, which is unusual — most states exempt food entirely. For a household spending a large share of income on necessities, this offsets a good portion of the income tax saving.
Property tax, by contrast, is well below the national average, which makes Tennessee a notably different proposition from Texas despite both having no income tax.
No. The Hall income tax was fully repealed effective for tax years beginning in 2021.
No. Neither Nashville, Memphis nor any other Tennessee municipality levies one.
Not for personal income. Business entities may have separate filing obligations.
A flat annual tax on holders of certain professional licences. It was repealed for most professions but still applies to a few, including attorneys, lobbyists and securities professionals. It is not withheld from wages, so it arrives as a separate bill.