What is the Tennessee sales tax rate?

The combined state + average local sales tax rate is about 9.56%.

How are capital gains taxed in Tennessee?

Tennessee does not tax long-term capital gains separately. Federal LTCG (0/15/20%) and 3.8% NIIT may still apply.

Is retirement income taxed in Tennessee?

No state tax on retirement income. Specific exclusions vary by age and AGI.

What is the property tax rate in Tennessee?

The average effective property tax is 0.71% of assessed value. Local rates vary widely by county and city.

Does Tennessee tax Social Security?

No — Social Security benefits are exempt from Tennessee income tax.

What filing deadlines apply in Tennessee?

Tennessee follows the federal April 15 deadline. Extensions are typically granted on request — see the state DOR for current forms.

Are pension distributions taxable in Tennessee?

No — pension income is fully exempt.

Does Tennessee have an estate or inheritance tax?

Federal estate tax applies above the unified credit; only a handful of states levy their own estate or inheritance tax. Verify current rules with a CPA.

Is the standard deduction the same as federal?

Tennessee has no income tax, so no state deduction applies.

Can I deduct state taxes on my federal return?

Yes — state + local taxes (SALT) are deductible up to $10,000 if you itemize. The cap is set in current law through 2025; check 2026 status before filing.

Does Tennessee accept the federal EITC?

Many states offer a state EITC matched as a percentage of the federal credit. Eligibility tracks the federal rules.

Are there local income taxes in Tennessee?

Tennessee generally does not impose local income taxes beyond the state rate.

Where can I find official Tennessee tax forms?

Visit the Tennessee Department of Revenue or Department of Taxation site for current forms, brackets, and credits.

How often does TaxEase update this guide?

Annually after IRS Revenue Procedures publish, and within 14 days for any major state legislative change. See our Editorial Policy.

Tennessee Tax Guide 2026

Everything residents of Tennessee need to know about state taxes in 2026 — income brackets, property tax, sales tax, capital gains, retirement, and small-business taxation, with planning tips aligned to current IRS guidance.

At a glance

Income tax system

No personal income tax

Effective income rate

None

Capital gains

None

Property tax

0.71%

Combined sales tax

9.56%

Retirement income

No state tax on retirement income

Income tax

Tennessee uses a no personal income tax. The average effective rate on wage income is 0% — there is no state income tax. Federal tax still applies; see our income tax calculator for a full breakdown.

Property tax

Effective property tax averages 0.71% of assessed home value. On a $400,000 home that is roughly $2,840 per year. Run your own number with the property tax calculator.

Sales tax

Combined state + local sales tax averages 9.56%. Some categories (groceries, prescription drugs, clothing) may be exempt or taxed at a lower rate.

Capital gains

Tennessee does not levy a separate state tax on long-term capital gains. Federal LTCG (0/15/20%) and 3.8% NIIT may still apply.

Estimate yours with the capital gains calculator.

Retirement taxation

No state tax on retirement income. Adjust contributions in our calculators to model the impact of pre-tax 401(k) / Traditional IRA contributions on your Tennessee liability.

Business taxation

No personal income tax (Hall tax repealed); 6.5% franchise/excise on corps.

Tennessee tax credits & deductions

Earned Income Tax Credit (state match)
Child & Dependent Care credit
Residential energy credit

Eligibility usually depends on AGI, filing status, and residency. Verify current-year rules with the Tennessee Department of Revenue or a CPA.

Planning tips for Tennessee residents

Maximize pre-tax retirement contributions to reduce state taxable income.
Bunch itemizable deductions into a single year when above the standard deduction.
Time long-term capital gains for years of lower other income.
Relocating from a high-tax state? Check residency rules — most high-tax states audit aggressively for partial-year claims.