Tennessee State Tax Guide

State tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact Tennessee residents.

Bottom Line

Middle-Class Families: Most Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)

Retirees: Most Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)

Residents of the Volunteer State are singing "Rocky Top" all the way to the bank, thanks to a low overall tax burden in the state. Tennessee has no income tax. Property taxes are well below average, too. Plus, there are no estate or inheritance taxes.

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However, the state sticks it to you when you're shopping with the second-highest average combined state and local sales tax rate in the nation. Fortunately, the low income and property taxes in Tennessee far outweigh the state's high sales taxes for most residents

Tennessee Income Taxes

Tennessee has no income tax.

Tennessee Sales Tax

7% state levy. There's also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined state and local rate of 9.547%, according to the Tax Foundation. Local taxes are limited, though: Only the first $1,600 of any single item is taxable.

  • Groceries: Taxable (4% state rate; additional local taxes may apply)
  • Clothing: Taxable
  • Motor Vehicles: Taxable (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200; additional local taxes may also apply)
  • Prescription Drugs: Exempt

Tennessee Real Property Taxes

In Tennessee, the median property tax rate is $685 per $100,000 of assessed home value.

Tennessee Property Tax Breaks for Retirees

Tennessee has a property tax relief program that reimburses income-eligible seniors age 65 or older (and others) for taxes paid on their primary residence. For the 2021 program, property tax relief applies to the first $29,100 of market value, and the combined income for eligible owners is limited to $31,190.

There's also a property tax freeze program available for homeowners 65 and older. A senior's income cannot exceed income limits set by his or her county to qualify.

Tennessee Motor Fuel Taxes

Gasoline: 27.4¢ per gallon.

Diesel: 28.4¢ per gallon.

Tennessee Sin Taxes

Cigarettes: $0.62 per pack

Other tobacco products: 6.6% of the wholesale price

Beer: $1.29 per gallon

Wine: $1.21 per gallon

Liquor: $4.40 per gallon

There's also an additional $0.15 tax on each case of alcoholic beverage sold in Tennessee.

Tennessee Estate and Inheritance Taxes

No estate or inheritance tax.