Tennessee Paycheck Calculator & Income Tax Rates (2026)

Tennessee does not levy a personal income tax, so there are no brackets, no standard deduction and no state withholding from your paycheck. Federal income tax, Social Security (6.2% up to $184,500) and Medicare (1.45%, plus 0.9% above $200,000) are the only payroll taxes you pay.

With no state tax, the effective rate in Tennessee rises only because federal brackets are progressive and the 0.9% additional Medicare tax kicks in above $200,000.

Filing status only changes the federal side in Tennessee. A married couple filing jointly on $100,000 keeps $84,710 versus $79,125 for a single filer — the difference comes entirely from the doubled federal standard deduction ($32,200 vs $16,100) and wider federal brackets.

Tennessee has no tax on wages or salaries for 2026, and the ban is constitutional: voters approved an amendment in 2014 that prohibits any state or local tax on payroll or earned personal income. Until recently the state did tax investment income. The Hall tax, dating to 1929, took 6% of interest and dividends above a small exemption; a 2016 law cut it one point a year starting in 2017, and it disappeared entirely on January 1, 2021, making Tennessee a full no-income-tax state. Nothing on a paycheck goes to Nashville — no wage tax, no local wage tax, and no tax on capital gains or retirement income. The trade-off is one of the heaviest sales tax burdens in the country, a 7% state rate plus local rates up to 2.75%, and a business tax structure that reaches pass-through entities: LLCs and S corporations pay a 6.5% excise tax on net earnings and a franchise tax on net worth, which sole proprietors and general partnerships avoid.

There is no individual income tax return, so no state standard deduction, personal exemption, itemized deduction, earned income credit or child credit exists. The federal standard deduction and credits apply unchanged, and Tennessee residents who itemize federally can deduct sales tax paid in place of state income tax. Business owners file instead under the franchise and excise tax, and a 2024 law dropped the property measure from the franchise tax base and refunded prior years' overpayments.

No Tennessee city or county levies an income or wage tax, and the 2014 constitutional amendment bars local governments as well as the state from taxing earned income. Local governments lean on the 2.25% to 2.75% local sales tax and property taxes, and Nashville and Memphis add hotel occupancy and rental-car taxes aimed at visitors.

The state rate is 7%, and counties and cities add up to 2.75%, so nearly all of Tennessee pays between 9.25% and 9.75% — Nashville and Knoxville sit at 9.25%, Memphis at 9.75%, and the statewide average of roughly 9.55% is among the two or three highest in the nation. Groceries are taxed at a reduced state rate of 4% plus the full local rate; prescription drugs are exempt. Local tax applies only to the first $1,600 of a single item, which caps the bite on cars and appliances.

Property taxes are low, with an effective rate near 0.6% of market value. Homes are assessed at 25% of appraised value before local rates apply, and there is no state property tax. Rates vary widely: Memphis and Shelby County carry the highest combined rate in the state, while suburban counties around Nashville are far lower. Tax relief programs reimburse part of the bill for low-income seniors, disabled homeowners and disabled veterans, and counties can adopt a tax freeze for homeowners 65 and older with income under a local threshold.

Every form of retirement income is untaxed: Social Security, pensions, military retirement, 401(k) and IRA withdrawals, annuities and — since the Hall tax's repeal in 2021 — interest and dividends too, the category that once made Tennessee a mixed bag for retirees living off a portfolio. The inheritance tax was phased out at the end of 2015 and there is no estate tax. The costs that do reach retirees are the 9.25%-plus sales tax on nearly everything they buy, including groceries at the reduced state rate, and property tax bills that, while low, get no across-the-board senior exemption — relief is means-tested and the tax freeze is county-optional.

W-2 employees at every income level keep their full paycheck after federal taxes, which is why Nashville has drawn relocating professionals from Illinois, California and New York. Retirees do as well as anywhere: no tax on Social Security, pensions, withdrawals or portfolio income. Consumers lose on the 9.55% average sales tax, the steepest single cost in Tennessee's system for a lower-income family, and the grocery tax hits that household hardest. Self-employed people who organize as an LLC or S corporation pay the 6.5% excise tax on net earnings — a bill a sole proprietor never sees, and one that matters more than any income tax for a small business choosing an entity.

The median household income in Tennessee is $53,000, which is $44,766 a year ($3,730 a month) after all taxes. That is close to the national median. After adjusting for cost of living, the purchasing power of that take-home is equivalent to $49,739 in an average-cost area.

Tennessee ranks #6 of 50 for raw take-home pay and #3 for cost-adjusted purchasing power at $100,000. The 3-place gap between the two reflects a below-average cost of living that boosts real purchasing power. The best state (Alaska) leaves $79,125; the worst (Oregon) leaves $70,932. Tennessee is $0 behind the leader.

Tennessee Tax Questions, Answered

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