What's Going on With Tennessee Property Tax Rules? What Homeowners Need to Know

The Cumberland River in Tennessee with buildings along its banks.

(Image credit: Getty Images)

While Tennessee homeowners grapple with skyrocketing local assessments, state lawmakers are moving to build a permanent firewall.

Local property appraiser reports indicate that property values in high-growth hubs, like Davidson County, have increased by as much as 45% over the last four years — a surge that often translates into a larger local tax bill.

In response, the Tennessee General Assembly is racing to pass a constitutional ban on any future statewide property tax, alongside emerging proposals to cap local rate hikes and grant full reimbursements for homeowners aged 65 and older.

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These shifting rules could impact your Tennessee property tax bill next year. Read on to learn how.

Tennessee property tax ban 2026

Tennessee hasn't collected a dime in state property taxes since 1949, but that absence is a matter of tradition. Without a formal ban, a statewide property tax could be levied in addition to local rates by a simple legislative majority.

Rutherford County Property Assessor Rob Mitchell has described this dormant authority as a "sleeping dragon" that could awaken at any moment. As Mitchell told Fox17, the sudden activation of such a tax would place a strain on homeowners, retirees, and small businesses already struggling with rising local assessments.

Last year, state lawmakers officially certified a constitutional amendment to prohibit any future statewide property tax in Tennessee. This moved the measure from the statehouse to voters in November 2026.

However, some argue that a statewide ban on property taxes isn't enough; that's why there's another proposal that might hit the 2026 Tennessee ballot: State property tax caps on local bills.

Does Tennessee have property tax caps?

In much of the country, state tax laws prevent local governments from raising property taxes above a mandated limit or "cap."

Tennessee, however, is one of only four states that doesn't institute a local property tax cap. Instead, Volunteer State property tax bills are largely determined by a vote from county or city leaders, which is why advocates are pushing for new 2026 legislation to cap local property tax rates.

For instance, state Sen. Joey Hensley (R-Hohenwald) reportedly plans to sponsor a bill in the 2026 Tennessee legislative session that would cap local property tax increases. Here's what's expected to be included:

Annual cap: Local property tax increases would be capped at 2% per year for Tennessee cities and counties.
Voter approval required: If a locality needed the rate to be higher than 2%, a detailed resolution would have to be passed, and voters would need to approve the rate hike.

Yet the proposal doesn't include a specific provision for adults 65 and older, who some officials say are particularly at risk of displacement due to rising property valuations. Recognizing that a 2% cap might not be enough for those on fixed incomes, lawmakers are also weighing a "Golden Homeowners" proposal that would provide tax reimbursements for these "older adults."

Tennessee property tax exemption for 65 and older

Tennessee currently offers two potential property tax relief programs that target homeowners. Here's a quick breakdown of what's available:

Property Tax Relief program. If you're 65 and older, a disabled person, or a surviving spouse of a veteran, you may be eligible for property tax reimbursement up to $175,000 of your property's assessed value (income limits and restrictions apply).
Property Tax Freeze program. While not all municipalities participate, localities can choose to lock your property tax amount at the first year you qualify, preventing you from being subject to increases in your property tax bill due to rising property values (though annual income/qualification checks may apply).

In addition to these, a new Tennessee property tax proposal is on the table for 2026 that would fully exempt adults 65 and older from paying local property taxes at all.

Local Rutherford County official, Rob Mitchell, has recently pitched an idea that would provide full reimbursement of property taxes paid by older adults who've had at least 20 years of state residency. The plan, titled "Tennessee Golden Homeowners Tax Relief Program," would aim to prevent adults 65 and older from leaving their homes.

Though the proposal gained attention in January 2026 through media outlets, an official bill has yet to be filed. Stay tuned for more updates.

Kate is a CPA with experience in audit and technology. As a Tax Writer at Kiplinger, Kate believes that tax and finance news should meet people where they are today, across cultural, educational, and disciplinary backgrounds.