Tennessee State Tax Guide

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

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Tennessee state tax: Overview

Although Tennessee has one of the highest sales tax rates in the U.S., relatively low property taxes compared to other states, Tennessee has no income taxes, and a generally low cost of living.

[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.] 

Tennessee income taxes

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There is no income tax in Tennessee. The state previously taxed income earned from stocks and bonds, but this tax was repealed in 2021.

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Tennessee sales tax

Tennessee has a 7% statewide sales tax. 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 9.55%, according to the Tax Foundation

  • Groceries are taxable but at a reduced rate of 4% (local taxes may still apply)
  • Clothing is taxable.
  • Prescription drugs are tax-exempt.

How Much Are Property Taxes in Tennessee?

little model house on a table

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Tennessee's property tax rate is below the national average. The average effective property tax rate in Tennessee is 0.66%, and the annual property taxes paid are less than $1,300. 

Tennessee Property Tax Breaks for Retirees

Property Tax Relief Program: Tennessee has a property tax relief program that reimburses income-eligible adults age 65 or older for taxes paid on their primary residence. 

Note: Veterans with disabilities and their surviving spouses (of any age) might also qualify for the Tennessee property tax relief program.

Property Tax Freeze: There's also a property tax freeze program available for eligible Tennessee residents. If approved, homeowners can have their tax-assessed value frozen, preventing tax increases in following years. Homeowners must meet specific criteria to qualify.

  • Age 65 or older by the end of the tax year in which the application is filed
  • Own the primary residence in a participating Tennessee county or city
  • Income must not exceed county limits. (Income limits can change each year.)

Tennessee gas tax and motor vehicle taxes

Motor vehicle purchases are taxable. (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200). Additional local taxes may also apply.

Tennessee's gas tax is $0.274, which is lower than many other states in the U.S.

Tennessee taxes on alchohol and tobacco

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Cigarettes$0.62 per pack
Other tobacco products6.6% of wholesale price
Beer$1.29 per gallon
Wine$1.21 per gallon
Liquor$4.40 per gallon
MarijuanaN/A (not permitted without a prescription)

Tennessee estate and inheritance taxes

There is no estate tax or inheritance tax in Tennessee.

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Katelyn Washington
Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.

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