Tennessee Tax Guide 2025
Explore Tennessee's 2025 state tax rates for income, sales, property, retirement, and more. Learn how Tennessee compares nationwide.


Navigating the complexities of state taxes can be daunting, but understanding Tennessee's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Volunteer State's tax system, from income and sales taxes to property taxes and retirement benefits.
Tennessee state tax: Overview
Tennessee has its pros and cons when it comes to taxes.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The state's sales tax is one of the highest in the United States, but some other advantages balance that out.
For example, there’s no state income tax at all in the Volunteer State, property taxes are on the lower side compared to other states, and the overall cost of living tends to be relatively affordable.
[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 tax
There is no income tax in Tennessee. The state previously taxed income earned from stocks and bonds, but this tax was repealed in 2021.
Tennessee retirement taxes
Tennessee is another state with no income tax, so there is no state tax liability on your retirement income.
- Tax on Taxable Income: N/A
- Social Security: Not taxable
- Pensions: Not taxable
- 401(k) and IRA Distributions: Not taxable
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 9.56%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Prescription drugs: Taxable
- Motor Vehicles: Taxable
How much are property taxes in Tennessee?
Tennessee's property tax rate is below the national average, especially in these ten cheapest places to live in Tennessee.
That's because the average effective property tax rate in Tennessee is just 0.49% (according to the Tax Foundation).
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
Gasoline: $0.20 per gallon.
Diesel: $0.17 per gallon.
Source: Sales Tax Handbook
Tennessee taxes on alchohol and tobacco
Product | Tax Amount |
---|---|
Cigarette | $0.62 per pack |
Other Tobacco Products | 6.60% of wholesale price |
Source: Sales Tax Handbook
Product | Tax Amount |
---|---|
Wine | $1.21 per gallon |
Beer | $1.29 per gallon |
Liquor | $4.40 per gallon |
Source: Sales Tax Handbook
Tennessee estate and inheritance taxes
There is no estate tax or inheritance tax in Tennessee.
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know Now
Tax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
The Smart Way to Retire: 13 Habits to Steal From the Wealthy
Check out these practical strategies that anyone can adopt, not just the rich, and get closer to achieving your retirement dreams.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know Now
Tax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?
Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Ten Cheapest Places to Live in Tennessee
Property Tax Moving to Tennessee might be within your reach. Homeowners in these counties pay some of the lowest property tax bills in the state.
-
Stay NJ Could Give You $6,500: The Deadline You Can't Miss
Property Taxes New Jersey has a new property tax relief program for 2025. The application deadline is approaching fast.
-
Social Security 2025: The Outdated Tax Rules Costing Retirees Money
Retirement Taxes Could the Social Security 90th anniversary be a good time to revisit old tax thresholds?
-
The Fall Garden Tax? What to Plant and How to Prepare
Tax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
Texas Sales Tax-Free Weekend 2025
Tax Holiday Here's what you needed to know about the Texas sales tax holiday.
-
Retirees Should Watch These Four Key Tax Changes in 2025
Tax Changes This year brings key tax changes that could affect your retirement taxes and income.