Tennessee vs Federal Tax Comparison
| Tax Type | TN State Rate | Federal Rate | Notes |
|---|---|---|---|
| Personal Income Tax | None | Federal: 10–37% | No state layer |
| Corporate Income Tax | 6.5% | Federal: 21% | 6.5% corporate income tax |
| State Sales Tax | 7% | No federal sales tax | Combined avg: 9.55% |
| Capital Gains Tax | None | Federal: 0–20% | Special rate may apply |
About Tennessee Taxes
No income tax (Hall Tax eliminated 2021); highest combined sales tax in US.
As a no-income-tax state, Tennessee attracts remote workers, retirees, and high-income earners seeking to reduce their overall tax burden. The absence of state income tax does not eliminate federal income tax obligations, which remain 10–37% depending on filing status and income level.
Corporate activity in Tennessee faces a 6.5% state corporate tax rate. 6.5% corporate income tax. Combined with the 21% federal corporate rate, businesses should plan accordingly.
Calculate Your Net Salary in Tennessee
See federal + TN state tax deductions, Social Security, Medicare, and take-home pay
Open US Salary CalculatorFrequently Asked Questions — Tennessee Taxes
Does Tennessee have a state income tax?
No. Tennessee (TN) does not impose a state income tax on wages or salaries. This makes it one of nine US states with no income tax, alongside Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
What is the corporate income tax rate in Tennessee?
Tennessee imposes a corporate income tax at 6.5%. 6.5% corporate income tax. Businesses should also account for federal corporate tax at 21% on top of the state rate.
What is the sales tax rate in Tennessee?
Tennessee has a state sales tax of 7%. When local city and county taxes are included, the average combined rate reaches 9.55%. Rates vary by locality so check the specific municipality for accurate figures.
How does Tennessee compare to neighboring states for taxes?
Tennessee's overall tax burden ranks favorably among US states. The state has no income tax. For individuals evaluating relocation or remote work, comparing the full picture — income, sales, and property taxes — is essential. Use our US Salary Calculator to estimate your net income in Tennessee.
Are there any special tax incentives or exemptions in Tennessee?
Tennessee offers notable tax characteristics: No income tax (Hall Tax eliminated 2021); highest combined sales tax in US. Businesses and individuals should consult a qualified tax advisor to understand eligibility for available credits, deductions, and incentives specific to Tennessee.
Other No-Income-Tax States
Nine US states impose no state income tax on wages:
Alaska Florida Nevada New Hampshire South Dakota Texas Washington WyomingCost of Living in Tennessee
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