Tennessee Income Tax Calculator

Overview of Tennessee Taxes

Tennessee has no income tax on salaries and wages. And beginning with the 2021 tax year, the state repealed all taxes levied on income earned from interest and dividends. Tennessee also has the third-highest average sales tax in the country, while homeowners in the state pay some of the lowest property taxes in the nation.

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Taxes in Tennessee

Tennessee State Tax Quick Facts

• Income tax: None
• Sales tax: 7.00% – 9.75%
• Property tax: 0.45% average effective rate
• Gas tax: 27.4 cents per gallon of regular gasoline

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 third-highest overall sales tax in the country, with combined state and local rates averaging 9.619%. 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. The effective median property tax rate (median property taxes paid divided by median home value) is 0.45%, one of the lowest in the country.

A financial advisor can help you understand how taxes fit into your overall financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel 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 Although the state used to tax income earned from interest and dividends, it has repealed this starting with the 2021 tax year.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 highest statewide rate in the nation. However, cities and counties can collect additional sales taxes, with local rates ranging from 2% to 2.75%. The table below shows the combined state and local rates for every county in Tennessee.

Sales Tax Rates (Updated December 2025)

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.

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. 

For single-item purchases in Tennessee, the state sales tax of 7% applies to the entire purchase price. Local sales tax applies only to the first $1,600 of the item’s cost. In addition, Tennessee imposes a separate 2.75% state single-article tax on the portion of the price between $1,600 and $3,200. Any amount above $3,200 is subject only to the standard 7% state sales tax, with no additional state single-article tax or local tax 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. 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 $1,488 per year. That adds up to an effective property tax rate of 0.45%, which is one of the lowest effective rates in the U.S. This rate ranges significantly depending on where you live. 

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 and lobbyists.

Tennessee Alcohol Tax

Tennessee’s tax on alcoholic beverages is $4.46 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 27.4 cents per gallon of regular gasoline.

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