Florida vs Tennessee: Taxes & Take-Home Pay 2026

Same paycheck, different everyday costs

Florida and Tennessee both have no personal income tax, so a worker on the same salary takes home exactly the same pay in Miami as in Memphis. What separates them is sales tax, which is much higher in Tennessee, and property and insurance costs, which tend to be higher in Florida.

People weighing these two states are usually remote workers, retirees and families who want to avoid income tax and are choosing between beach and mountains, or between Florida's crowded metros and Nashville, Knoxville or Chattanooga.

Income and investment tax: identical

Neither state taxes wages, pensions, IRA withdrawals, Social Security, interest, dividends or capital gains. Tennessee reached that point in 2021, when the Hall income tax on interest and dividends was fully repealed. Florida has never taxed personal income.

Neither state has local income taxes, and neither withholds anything for state paid-leave or disability programs. Florida's reemployment tax is paid only by employers. Your pay stub shows federal income tax, Social Security and Medicare and nothing else.

Sales tax: the main difference

Tennessee's 9.61% average combined rate is the second highest in the country, 2.63% above Florida's. On $35,000 a year of taxable purchases that is about $921 more in Tennessee.

Groceries widen the gap. Florida exempts food products for home consumption, while Tennessee charges a reduced 4% state rate on food plus local tax. A household spending $9,000 a year on groceries pays at least $360 in Tennessee state tax on them, and more once local tax is added.

Property tax and the homestead advantage

Florida gives permanent residents a homestead exemption that can reduce taxable value by up to $50,000 and caps annual increases in a homestead's assessed value at 3% or the change in the Consumer Price Index, whichever is less. You apply with the county property appraiser by March 1 of the year you want it to start. Homeowners who move within Florida may be able to transfer part of their accumulated benefit to the new home.

Tennessee property taxes are set by counties and cities and are generally lower than in many Florida counties. But new Florida buyers do not inherit the seller's Save Our Homes benefit, so a home bought today is assessed at market value and can carry a far higher bill than the previous owner paid.

Which state suits which household

Worked example: a retired couple spends $9,000 on groceries and $25,000 on other taxable goods each year. In Florida, at the average rate, they pay about $1,745 in sales tax. In Tennessee they pay about $2,403 on the general goods plus at least $360 in state tax on food, for a difference of roughly $1,018 a year before local grocery tax.

• Renters who spend a lot on taxable goods: Florida, because of its lower sales tax and untaxed groceries.
• Long-time Florida homeowners: Florida, as Save Our Homes keeps their assessed value well below market.
• New buyers on a budget: often Tennessee, where purchase prices and property taxes can be lower, despite paying more sales tax.
• Retirees: both are equally income-tax-free, so compare property tax, home insurance and grocery tax using the actual properties you are considering.
• Big one-off purchases: a car or boat costs noticeably more in sales tax in Tennessee.

Moving between the two

There is no state income tax return to close out in either direction. What you do need to handle is local: register your car and get a new license in your new state, update your voter registration, and if you buy a home in Florida, file the homestead application by March 1. Itemizers in either state can deduct sales tax on Schedule A instead of income tax, which matters more to Tennessee residents who pay more of it.

For example, a Tennessee couple who buy a $40,000 car pay about $3,844 in sales tax at the average combined rate, against about $2,792 in Florida. If they itemize, they can add the sales tax on the car to the IRS table amount for their income, within the $40,400 SALT cap for 2026. Most retirees take the standard deduction, so this helps mainly those with a mortgage or large charitable gifts.