Taxes in Tennessee
Updated:
By: Lauren Hamer
Sr. Editor
Edited By: Jeff Smith
Sr. Content Manager
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All residents of Tennessee enjoy a low overall tax burden, including no estate, inheritance, or income tax. Below, we explain various Tennessee state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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Tennessee Tax Rates
| State Sales Tax | 7% |
| Avg State/Local Sales Tax | 9.55% |
| Gas Tax | $0.26 per gallon |
| Diesel Tax | $0.27 per gallon |
| Cigarette Tax | $0.62 per pack |
| Income Tax | 0% |
| Effective Tax Rate: | 0% |
| Property Tax | 0.71% |
| Social Security Tax | No |
| Medical/Dental Deduction: | None |
| Federal Income Tax Deduction: | None |
| Retirement Tax | No |
Tennessee State Taxes Explained
Tennessee Sales Tax
7%. Localities can add up to 2.75%. Groceries are taxable (at a 4% state rate plus additional local taxes) and so are groceries. Vehicles are taxed at a 7% basic rate, plus 2.75% state tax on sales prices between $1,600 and $3,200 (plus additional local taxes).
Tennessee Income Taxes
There is no income tax in Tennessee. Only retirement dividends and interest are taxed.
Tennessee Property Taxes
The average effective property tax rate is 0.71%, which is collected by counties and cities. The median home value in Tennessee is $167,200, which incurs $1,190 annually.
Tennessee offers property tax relief to eligible homeowners aged 65 or older, disabled individuals and veterans or their surviving spouses. Tennessee Tax Relief provides a rebate check to property owners when they pay their taxes if their total income is below $41,900. The amount varies from year to year depending on property assessment values and local tax rates.
The property tax freeze program is available for homeowners 65 and older who meet income qualifications. The required maximum income level varies by county, ranging from $31,600 to $56,790. For additional information, see Tennessee’s Tax Freeze page.
Tennessee Retirement Taxes
Retirement income is not taxed.
Tennessee Estate and Inheritance Taxes
Tennessee has no inheritance tax or estate tax.
For further information, visit the Tennessee Department of Revenue.