Tennessee Income Tax Calculator 2026

Tennessee has no personal income tax since 2021

Tennessee does not tax wages, salaries, interest, dividends, capital gains or retirement income. The last piece, the Hall income tax on interest and dividends, was fully repealed for tax years beginning on or after January 1, 2021. Since then, individuals have had no Tennessee income tax return to file.

Your annual income tax is therefore your federal tax. For 2026, a single filer pays nothing on the first $16,100 (the standard deduction), then 10%, 12%, 22% and higher brackets on taxable income above that.

How Tennessee makes up the revenue

Tennessee leans on sales tax. The state rate is 7%, local governments add up to 2.75%, and the average combined rate is 9.61%, the second highest in the country according to the Tax Foundation. Groceries get a reduced 4% state rate plus local tax.

For a household that spends $40,000 a year on taxable goods, that is roughly $3,844 in sales tax, which is worth comparing against what an income tax would cost in another state.

Use the federal sales tax deduction

Tennessee residents who itemize can deduct state and local sales tax on Schedule A instead of income tax. With Tennessee’s high combined rate, this deduction can be meaningful, especially in a year you buy a car or boat. The total SALT deduction, including property tax, is capped at $40,400 for 2026 (lower for very high incomes, but not below $10,000).

You can claim actual sales tax from receipts or use the IRS optional sales tax tables and Sales Tax Deduction Calculator, then add sales tax paid on certain large purchases.

Federal tax examples for Tennessee residents

Wages only, standard deduction, no credits. These are complete income tax bills for a Tennessee resident.

Example: investment income with no state tax

Because Tennessee no longer taxes interest or dividends, investors face only federal rates. Long-term capital gains and qualified dividends are taxed at 0%, 15% or 20% depending on taxable income. For 2026, a single filer pays 0% on gains that fall within taxable income up to $49,450 ($98,900 joint), and 20% only above $545,500 ($613,700 joint).

Example: a married couple with $80,000 of taxable wage income and a $40,000 long-term gain owes $3,165 of federal capital gains tax. The first $18,900 of the gain fills the rest of the 0% band and the remainder is taxed at 15%. In a state that taxed the gain as ordinary income at 5%, it would add about $2,000 of state tax; in Tennessee it adds nothing.

High earners should also budget for the 3.8% net investment income tax, which applies to investment income once modified AGI passes $200,000 ($250,000 joint).

Retirees, remote workers and people moving in

Tennessee does not tax pensions, IRA withdrawals or Social Security. Federally, up to 85% of Social Security benefits can be taxable once half your benefits plus other income exceed $34,000 (single) or $44,000 (joint).

Remote workers who live in Tennessee and work for an out-of-state employer generally owe no state income tax on that pay, as long as the work is performed in Tennessee. If you move to Tennessee mid-year, file a part-year return in your former state for the months you lived there.