What Tennessee does and doesn't tax
Tennessee does not tax wages, salaries, tips, interest, dividends, pensions or Social Security, and it has no state income tax withholding. Tennessee never taxed wages, and its Hall tax on interest and dividends was fully repealed starting with 2021.
Federal income tax still applies in full — the 2026 federal brackets run from 10% to 37% — and Social Security (6.2%) and Medicare (1.45%) come out of every paycheck. If you earn wages in a state that taxes income, for example by commuting across a border, that state can tax the wages earned there.
Income tax you avoid at common incomes
What a single filer would owe Virginia, the nearby state with the highest tax at $75,000, compared with $0 in Tennessee:
| Income | Tennessee | Virginia |
|---|---|---|
| $30,000 | $0 | $911 |
| $50,000 | $0 | $2,061 |
| $75,000 | $0 | $3,498 |
| $100,000 | $0 | $4,936 |
| $150,000 | $0 | $7,811 |
| $250,000 | $0 | $13,561 |
Tennessee compared with nearby states
At $75,000 (single), Tennessee ranks 43 (tied with 8 others) of 51 for state income tax, where 1 is the highest; 9 jurisdictions charge nothing at this income.
| State | Tax on $75,000 | Effective rate | Top rate |
|---|---|---|---|
| Tennessee | $0 | 0% | none |
| Kentucky | $2,507 | 3.34% | 3.5% |
| Virginia | $3,498 | 4.66% | 5.75% |
| North Carolina | $2,484 | 3.31% | 3.99% |
| Georgia | $2,994 | 3.99% | 4.99% |
| Alabama | $3,127 | 4.17% | 5% |
| Mississippi | $2,268 | 3.02% | 4% |
| Arkansas | $2,287 | 3.05% | 3.7% |
| Missouri | $2,534 | 3.38% | 4.7% |
More about taxes in Tennessee
- Tennessee relies on sales tax instead of an income tax: its 7% state rate plus local taxes averages 9.61%, the second-highest combined rate.
Frequently asked questions
Does Tennessee have a state income tax?
No. Tennessee never taxed wages, and its Hall tax on interest and dividends was fully repealed starting with 2021. Wages, salaries, interest, dividends and retirement income are not taxed by the state.
How much does living in Tennessee save on income tax?
On $75,000 of income, a single filer pays $0 to Tennessee; 9 of 51 jurisdictions charge nothing at that income. Nearby, Virginia would charge about $3,498.
Do I still pay federal income tax in Tennessee?
Yes. Federal income tax, Social Security and Medicare apply in every state. Tennessee residents who earn wages in a state that does tax income can also owe that state tax on those wages.
What other taxes do Tennessee residents pay?
Tennessee relies on sales tax instead of an income tax: its 7% state rate plus local taxes averages 9.61%, the second-highest combined rate.
Estimates only — not tax advice. Tennessee figures: Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 (as of Jan. 1, 2026). Checked October 2026. Your return may include income, deductions and credits this estimate leaves out.