Tennessee has no state income tax on wages. Your paycheck is only reduced by federal income tax, Social Security, and Medicare — one of the lowest total tax burdens in the US.
Tennessee previously had the Hall income tax, which taxed dividends and interest income at rates up to 6%. That tax was phased out and fully eliminated on January 1, 2021. Tennessee workers now pay zero state income tax on wages, salaries, self-employment income, or investment income. The trade-off: Tennessee has one of the highest combined sales tax rates in the country — 7% state plus an average of ~2.55% local, totaling nearly 9.55% in many areas.
Estimates only. Tennessee has no state income tax on wages. Only federal income tax, Social Security, and Medicare are withheld. Consult a tax professional for advice.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| Tennessee State Tax | $0.00 ✓ |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
No. Tennessee has no state income tax on wages, salaries, or self-employment income. Tennessee previously had the Hall income tax, which taxed only investment income (dividends and interest) at rates from 1% to 6%. That tax was phased out over five years and fully eliminated on January 1, 2021. Tennessee is now one of nine US states with no income tax of any kind.
Only three taxes come out of a Tennessee paycheck: federal income tax (progressive brackets based on your W-4), Social Security (6.2% up to $184,500), and Medicare (1.45% on all wages). There is no Tennessee state withholding line on your paycheck at all. Tennessee's high sales tax (roughly 9.5% combined in most areas) affects what you spend, but nothing is deducted from your wages at the source.
The difference is meaningful and grows with income. A single filer earning $75,000 in Tennessee takes home approximately $3,200 more per year than in North Carolina (4.5% flat), $3,500 more than in Virginia (up to 5.75%), $4,600 more than Georgia (5.49% flat), and $5,000 more than Kentucky (4.5% flat). At $150,000 the no-tax advantage roughly doubles because more income avoids state taxation.
Yes. Tennessee funds its government primarily through sales tax rather than income tax. The state sales tax rate is 7%, and local governments add an average of about 2.55%, giving most Tennessee residents a combined rate of around 9.55% — one of the highest combined sales tax rates in the country. Tennessee also taxes groceries at 4% (state portion), though some local jurisdictions have eliminated local tax on food.
Yes — significantly so. A high earner paying 5–10% state income tax in another state and moving to Tennessee saves that entire amount on every dollar earned. For a $200,000 earner coming from California, eliminating California's ~9% marginal state tax saves roughly $12,000–$15,000 per year. Retirees benefit equally: Social Security, pension income, and 401(k) distributions are all fully exempt from Tennessee state tax because there is no state income tax at all.
No. Nashville, Memphis, Knoxville, and all other Tennessee cities do not levy a local income tax on wages. Tennessee's no-income-tax status applies statewide and uniformly — no matter where in Tennessee you live or work, you pay zero state or local income tax on your wages.
Yes. Self-employed Tennessee residents pay no state income tax on their business income. They still owe federal self-employment tax (15.3% on the first $184,500 of net self-employment income, covering both the employee and employer share of Social Security and Medicare), and federal income tax. But Tennessee adds nothing on top. Use our 1099 Tax Calculator to estimate your full federal SE tax burden.
Tennessee completed the elimination in 2021. The Hall income tax on investment income was phased down from 6% to 0% over five years: it dropped to 4% in 2017, 3% in 2018, 2% in 2019, 1% in 2020, and was fully repealed effective January 1, 2021. Wages and salaries were never subject to the Hall tax — those were always tax-free in Tennessee. The 2021 repeal eliminated the last remaining Tennessee income tax entirely.