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Taxes in Tennessee

Updated: February 7, 2023
By: Lauren Hamer
Lauren Hamer
Bringing more than a decade of editorial experience to Retirement Living, Lauren focuses on reporting senior-related issues, including retirement planning, finance, consumer protection, and health and wellness. Lauren has edited consumer content for Credible, Angi, Slickdeals, Jobs for the Future, and more.
Edited by: Jeff Smith
Jeff Smith
Sr. Content Manager
As Retirement Living’s senior content manager, Jeff oversees the product and publishing of all retirement, investing, and consumer wellness content on the site. His extensive expertise in brand messaging and creating data-driven stories helps position Retirement Living as a top authority for senior content and community resources.
Sr. Content Manager
Tennessee - State

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.

Tennessee Tax Rates

State Taxes in Tennessee
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.