Does Tennessee Have a State Income Tax?
- 2 sections
- 1 table
- 2 sources cited
No. Tennessee does not tax personal income of any kind, so wages, salaries, interest, and dividends are all free of state income tax. Its last personal income tax, the Hall income tax on interest and dividend income, was phased down one percentage point a year from 2016 to 2020 and fully repealed in 2021. Since January 1, 2021, the state has levied no personal income tax of any form on individuals (Wikipedia, Hall income tax). You still pay federal income tax. The state also raises money in other ways, including sales tax. In Davidson County, the combined rate on general purchases has been 9.75 percent since February 1, 2025, when a voter-approved transit surcharge took effect (WSMV).
How the Hall Tax Was Phased Out
| Tax years beginning | Hall income tax rate |
|---|---|
| before 2016 | 6% on taxable interest and dividends above an exemption |
| 2016 | 5% |
| January 1, 2017 | 4% |
| January 1, 2018 | 3% |
| January 1, 2019 | 2% |
| January 1, 2020 | 1% |
| January 1, 2021 | repealed; no personal income tax |
Source: Wikipedia, Hall income tax. The tax was named for Frank S. Hall, who introduced it in the state Senate in 1929.
What This Means for Your Budget
- Your paycheck: no state income tax is withheld; federal withholding still applies.
- Everyday purchases: budget for sales tax; the Davidson County rate and grocery rate are in the cost of living in Nashville.
- Business owners: businesses face separate state business taxes; check the Tennessee Department of Revenue or a tax professional for your entity type.
This is general information, not tax advice. If you are moving, compare your current state’s tax on your own income, and see whether Nashville is a good city to move to.