Retirement Living takes an unbiased approach to our reviews. We may earn money when you click a partner link. Learn More

› Taxes by State

Tennessee - State

Taxes in Tennessee

From no income or inheritance taxes and low property taxes to higher consumption-based sales taxes, Tennessee’s tax structure strongly benefits retirees with stable income and homeownership while placing more burden on everyday purchases.

Avatar photo
By:
Avatar photo

Lauren Hamer
Sr. Editor

Lauren is a Certified Financial Education Instructor℠ (CFEI®) with more than a decade of experience covering senior-related issues, retirement planning, personal finance, and consumer protection. She is passionate about helping seniors and their families make informed decisions. Her work has been published on Credible, Angi, ConsumerAffairs, and more.
Avatar photo
Edited By:
Avatar photo

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.

Updated:

At a glance:

  • Tennessee has no state income, inheritance, or estate tax, making it highly favorable for retirees.
  • Property taxes are among the lowest in the country, with additional relief programs for seniors, veterans, and low-income homeowners.
  • Sales tax rates are relatively high and apply broadly, including to groceries and some essential goods.

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.

Financial Advisors

SmartAsset Financial Advisors logo
4.7 Stars

SmartAsset Financial Advisors

  • Advisors Near You
  • No-Fee Options
Find An Advisor

Tennessee Tax Rates

State Sales Tax7%
Avg State/Local Sales Tax9.55%
Gas Tax$0.274 per gallon
Diesel Tax$0.24 per gallon
Cigarette Tax$0.62 per pack
Income Tax0%
Effective Tax Rate0%
Property Tax0.49%
Social Security TaxNo
Medical/Dental DeductionNone
Federal Income Tax DeductionNone
Retirement TaxNo
State Taxes in Tennessee

Tennessee Tax Rates Explained

Tennessee Sales Tax

7%. Localities can add up to 3%. 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 Tax

There is no income tax in Tennessee. Only retirement dividends and interest are taxed.

Tennessee Property Taxes

The average effective property tax rate is 0.49%, which is collected by counties and cities. The median home value in Tennessee is $330,600, which incurs $1,620 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 $36,370. 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 $37,530 to $67,460. For additional information, see Tennessee’s Tax Freeze page.

Tennessee Retirement Taxes

Retirement income is not taxed.

Tennessee Inheritance and Estate Taxes

Tennessee has no inheritance tax or estate tax.

For further information, visit the Tennessee Department of Revenue.