Tennessee Salary Calculator 2026 — Free Take-Home Pay Estimator

Tennessee Income Tax Summary

Tennessee has no state income tax on earned income, wages, or salaries. The state previously taxed interest and dividend income but that tax was fully repealed as of 2021. Tennessee relies on sales tax and property tax for revenue. The state has a relatively low cost of living and no income tax burden on individuals. [Source: Tennessee Department of Revenue, 2026]

Tennessee Income Tax Rules

• No state income tax — no tax on wages, salaries, tips, interest, dividends, capital gains, or business income
• No standard deduction or personal exemption because there is no income tax [Source: Tennessee Department of Revenue, 2026]
• State sales tax rate is 7%, with local options up to 2.75% [Source: Tennessee Department of Revenue, 2026]
• Property taxes are relatively low
• No estate tax or inheritance tax
• Hall income tax on interest and dividends was fully repealed January 1, 2021

Tennessee Payroll & Withholding Rules

Since Tennessee has no income tax, there is no state withholding requirement. Employers do not withhold any state income tax from employee wages. Unemployment insurance tax is employer-paid only. There are no state disability or paid family leave programs requiring employee contributions. [Source: Tennessee Department of Revenue, 2026]

Local Taxes in Tennessee

Tennessee does not levy county or city income taxes. However, local governments impose local sales taxes and property taxes. There are no local payroll or income taxes assessed on individuals anywhere in Tennessee.

Cost of Living Context

Tennessee's cost of living is about 8% below the national average. Housing is affordable in most areas, though Nashville has seen significant price increases. No state income tax helps offset higher housing costs in desirable metro areas. Major cities include Nashville, Memphis, Knoxville, and Chattanooga. [Source: Tennessee Department of Revenue, 2026]

Real-World Example: Tennessee

For a single filer earning $55,000/year in Nashville, Tennessee:

• Federal taxable income: ~$40,400 (after $14,600 standard deduction)
• Tennessee state tax: ~$0 (no state income tax)
• Estimated take-home: ~$4,199/month (pre-FICA, pre-insurance)

Note: Actual results vary based on deductions, credits, and local taxes.

Tennessee FAQs

Q: Does Tennessee have a state income tax? A: No, Tennessee has no state income tax on any form of personal income.

Q: Does Tennessee tax retirement income? A: No, all retirement income including Social Security, pensions, and IRA distributions is tax-free at the state level.

Q: Does Tennessee have a state sales tax? A: Yes, Tennessee has a state sales tax rate of 7%, the highest in the nation, with local additions up to 2.75%. [Source: Tennessee Department of Revenue, 2026]

Q: What was the Hall income tax? A: The Hall tax was Tennessee's tax on interest and dividend income, which was fully repealed as of January 1, 2021.

Q: Do I need to file a Tennessee state tax return? A: No, Tennessee does not require individuals to file a state income tax return.

Q: How does Tennessee fund its government without an income tax? A: Tennessee relies on sales tax, which is the highest in the nation, and property tax.

Q: Are capital gains taxed in Tennessee? A: No, capital gains are not taxed at the state level in Tennessee.