Tennessee vs Texas: Taxes & Take-Home Pay 2026

Two no-income-tax states, two different trade-offs

Tennessee and Texas both leave wages untaxed, so your paycheck is the same in Nashville as in Austin for the same salary. The differences are in what you buy and what you own: Tennessee has one of the highest sales taxes in the country and comparatively modest property taxes, while Texas has a lower sales tax and much heavier property taxes.

That makes the comparison less about salary and more about lifestyle. A renter who spends freely may come out ahead in Texas; a homeowner, especially one with an expensive house, usually comes out ahead in Tennessee.

Income tax: nothing on either side

Neither state taxes wages, salaries, pensions or Social Security. Tennessee used to tax interest and dividends under the Hall income tax, but it was fully repealed for tax years starting January 1, 2021, so Tennessee now matches Texas on investment income too. Neither state has a city or county income tax or an employee-paid paid-leave program.

Your Form W-4 is the only withholding form you fill out in either state. If you moved from an income-tax state, make sure your old employer's state withholding stops with your last paycheck there.

Sales tax: Tennessee's biggest cost

Tennessee's average combined rate of 9.61% is the second highest in the country. For a household that spends $35,000 a year on taxable goods, the difference from Texas's average is about $494 a year. Tennessee does tax groceries, at a reduced 4% state rate plus local tax, so a family spending $9,000 a year on food at home pays at least $360 in state tax on it before local tax.

Deducting sales tax on your federal return

Because neither state has an income tax, residents who itemize can deduct state and local general sales taxes on Schedule A instead. You can use actual receipts or the IRS sales tax tables, and add sales tax paid on a car, boat or other big-ticket item. The total deduction for state and local taxes, including property tax, is capped at $40,400 for 2026, with a reduction for very high incomes.

This helps Tennesseans more than Texans in principle, since they pay more sales tax, but in practice only households whose mortgage interest, charitable gifts and taxes exceed the $32,200 joint standard deduction benefit. Texas homeowners with large property tax bills reach the SALT cap faster.

Property tax: Texas collects more

Texas relies heavily on local property tax, with effective rates among the highest in the country. Tennessee's property taxes are generally lower. Texas does offer large school-tax homestead exemptions, $140,000 of a home's value and another $60,000 for owners 65 or older or disabled, but city, county and special district taxes still apply.

Worked comparison: suppose a couple buys a $450,000 house and spends $35,000 a year on taxable purchases. Tennessee costs them roughly $494 more a year in sales tax. If the total Texas property tax bill on the same house runs even one percentage point of value higher than in Tennessee, that is $4,500 a year, more than wiping out Tennessee's sales tax disadvantage. Check the actual tax bill on the specific property in both places before deciding.

How to run the numbers for your own move

Because income tax is zero in both states, a useful comparison takes four inputs that are specific to you rather than state averages:

• Your annual taxable spending. Multiply it by 1.41%, the gap between the two average combined rates, or better, by the gap between the actual rates in the two cities you are considering.
• Your grocery bill. In Tennessee add at least 4% plus the local rate.
• The property tax bill on the actual home, after the homestead exemption you would qualify for. In Texas, ask for the current tax statement and the total rate of every taxing unit on it.
• Big purchases in the next few years, such as a car, which carry sales tax at the same rates.

Remote workers and the year you move

Moving between Tennessee and Texas involves no state income tax return on either end. The return you might still owe is to a third state: if you work remotely for an employer in a state that taxes nonresidents, or you left an income-tax state partway through the year, you file a part-year or nonresident return there.

Things that do change on the move are local: register vehicles and pay any title fees in your new state, and if you buy a home in Texas, file for the homestead exemption with the county appraisal district so it applies to your next tax bill.