Georgia vs Tennessee: Taxes & Take-Home Pay 2026

The short answer: Tennessee taxes spending, Georgia taxes income

Tennessee does not tax wages at all. Georgia taxes income above its deductions at a flat 4.99% in 2026. Tennessee makes up part of the gap at the register: its average combined sales tax is 9.61%, against 7.56% in Georgia.

People weigh this choice most often around Chattanooga, where the metro area spills into northwest Georgia, and when moving between Atlanta and Nashville for work. For most salaried households, the missing income tax outweighs the higher sales tax by a wide margin.

A worked example: income tax saved vs sales tax paid

Take a single worker earning $85,000. In Georgia, after the $15,000 standard deduction, state income tax is $3,493. In Tennessee it is zero.

Now assume $30,000 a year of spending that is subject to sales tax. At the average combined rates, that costs about $2,268 in Georgia and $2,883 in Tennessee, $615 more in Tennessee. The net advantage to Tennessee in this example is about $2,878 a year.

The sales tax gap grows with what you spend, not what you earn. That is why Tennessee favours high earners and savers more than people who spend most of their income on taxable goods.

How Georgia income tax works in 2026

Georgia's 2026 income tax is a single 4.99% rate on income above the standard deduction and dependent deductions. Three details matter for anyone weighing it against Tennessee's zero:

• HB 463 cut the flat rate to 4.99% for all of 2026. Withholding stayed at 5.19% until May 11, 2026, so many Georgia workers will get some of that back when they file.
• The standard deduction is $15,000 for single filers and $30,000 for married couples. Each dependent adds $5,000.
• Under HB 463, the rate drops by 0.125 points a year until it reaches 3.99%, so the Georgia side of this comparison should shrink over time.

Groceries, cars and the sales tax details

Tennessee's state rate is 7%, and counties and cities can add up to 2.75%. Groceries are taxed at a lower 4% state rate plus local tax. A Tennessee family spending heavily on food still pays tax on it, which is worth counting if your household is large.

Georgia's state rate is only 4%, with local options bringing the average to 7.56%. Cars are different: Georgia charges a one-time title ad valorem tax (TAVT), currently 7.0% of the vehicle's fair market value, in place of sales tax and the annual ad valorem tax, so price a car purchase separately.

If you itemize on your federal return, you can deduct state and local sales tax instead of income tax. Tennessee residents almost always take the sales tax option. The total state and local tax deduction, including property tax, is capped at $40,400 for 2026.

Retirement income: closer than it looks

Tennessee does not tax any retirement income, and since 2021 it has not taxed interest or dividends either, after the Hall income tax was repealed.

Georgia is generous too. Social Security is not taxed, and Georgia's retirement income exclusion (per the 2025 IT-511) is up to $35,000 per person aged 62 to 64 and up to $65,000 per person aged 65 or older. It covers pensions, IRA withdrawals, interest, dividends, capital gains, rental income and up to $5,000 of earned income. HB 463 raises the exclusion to $70,000 from 2027. A married couple over 65 can shelter up to $130,000 under the 2025 rules, so many Georgia retirees owe little or nothing.

Living in one state and working in the other

A Tennessee resident commuting into Georgia, for example from Chattanooga to Dalton, owes Georgia tax on Georgia wages. They file a Georgia nonresident return using Form 500 Schedule 3. Because Tennessee has no income tax, there is no home-state credit to offset that, so living in Tennessee does not avoid Georgia tax on work done in Georgia.

A Georgia resident commuting into Tennessee owes no Tennessee tax on wages. They still owe Georgia tax on all of their income as a Georgia resident.

Remote workers are taxed where they live and work. A Tennessee resident working remotely for an Atlanta employer, and doing all of the work in Tennessee, generally has no Georgia wage income, but should make sure the employer stops withholding Georgia tax.

The year you move

Moving from Georgia to Tennessee means a Georgia part-year return for the months you lived there (Form 500 with Schedule 3), and no Tennessee return at all. Moving the other way, Georgia taxes your income from the date you became a resident. Georgia prorates the retirement exclusion for part-year residents. Give your employer a new state withholding certificate on the day your residence changes.