The Kiplinger Tax Map: Guide to State Income Taxes, State Sales Taxes, Gas Taxes, Sin Taxes
Tool | Updated October 2019

State-by-State Guide to Taxes

Compare state tax rates and rules — on income, ordinary purchases, gas, sin products, property, and more — across the U.S.


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The Bottom Line
Flag of Tennessee

Most Tax Friendly

There’s no broad-based income tax in the Volunteer State—only interest and dividends are subject to Tennessee's limited income tax. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is also exempt from the 2% (for 2019) tax, and it’s waived if you’re at least 100 years old. Plus, the tax is being phased out at a rate of 1% per year. So it will be completely eliminated by 2021. Property taxes in Tennessee are reasonable, too. Expect to pay only about $3,072 per year for a $400,000 home, which is well below the national average.

Tennessee sticks it to you when you’re shopping, though. At 9.47%, its average combined state and local sales tax rate is tied for the highest in the nation, according to the Tax Foundation. Tennessee also has the highest beer tax in the country—$1.29 per gallon.

Sales Tax

7% state levy. Localities can add up to 2.75%, with an average combined rate of 9.47%, according to the Tax Foundation. Groceries are taxed at 5% by the state, plus whatever local rate is in effect. Local taxes are limited, though: Only the first $1,600 of any item is taxable.

Income Tax Range

There’s no state income tax, so salaries, wages, Social Security benefits, IRA distributions and pension income are not taxed. But Tennessee does have the Hall Tax, which taxes dividends and some interest at 3% (in 2018). The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. The Hall Tax is being lowered by 1% a year (so in 2019, it’s 2%). By 2021, the Hall Tax will be phased out entirely. The tax is also waived if you’re over 100.

Motor Fuel Taxes

Gasoline: $0.2740 per gallon.
Diesel: $0.2840 per gallon.

Property Taxes

In Tennessee, residents pay an average of $768 in taxes per $100,000 of assessed home value.

Vehicle Taxes

Sales tax is due on purchases.

Sin Taxes

Cigarettes and little cigars: $0.62 per pack
Other tobacco products: 6.6% of the wholesale price

Beer: $1.29 per gallon (highest in the country)
Wine: $1.27 per gallon
Liquor: $4.46 per gallon

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