Tennessee State Taxes
Quick Tax Facts
- Income Tax: 0%
- State Sales Tax: 7%
- Median Property Tax: $933
Tennessee is well-known for its whiskey and music. Home to Nashville, the heart of county music and the birthplace of many music legends, Tennessee is also a great place to raise a family. The state even offers free community college to any child that graduates from a Tennessee high school! Another perk for families – no state income tax and low property taxes. But, beware, sales tax rates are some of the highest in the United States.
Tennessee Income Tax
Tennessee does not levy a personal income tax. There is, however, a 1% to 2% tax on income earned from interest and/or dividends.
Tennessee Sales Tax
Tennessee levies a state sales tax rate of 7%. There are additional sales taxes at the local level, which vary by city and/or county. Local sales tax rates may not exceed 2.75%. Sales tax is the principal source of state tax revenue, accounting for nearly 60% of all tax collections.
Tennessee Property Taxes
In Tennessee, the county commission and local governments determine the property tax rates for their areas. For residential property, property tax is calculated by multiplying the appraised value by 25% and then multiplying that product by the local tax rate.
The median property tax bill in Tennessee is $933 (based on a median home value of $137,300). Williamson County has the highest average annual bill at $1,879. The lowest average property tax bill in the state is $333 in Decatur County.
Tennessee Tax Holidays
For 2023, Tennessee has two tax holidays planned.
- Annual Sales Tax Holiday – Begins July 28, 2023, and runs through Sunday, July 30, 2023. Exempt items include general apparel retailing for $100 or less per item.
- Grocery Tax Holiday – Food and food ingredients are exempt from sales tax during this 3-month event which runs from August 1, 2023, through October 31, 2023.
Tennessee Tax Resources
If you need more information about taxes in Tennessee, please visit the Tennessee Department of Revenue website for additional resources.