Tennessee state income tax rates

Tennessee is one of nine states that doesn’t tax individual wage income earned by its residents.

Tennessee personal income tax rates for 2024

Tennessee residents pay no personal state income tax.

However, it does require companies based in the state to pay income taxes annually. Tennessee has a 6.5 percent corporate tax. There’s also a state gross receipts tax. But small businesses with annual gross sales under $100,000 don’t need to file business taxes.

The state’s sales tax rate is higher than in most other parts of the country.

Tennessee sales tax rate

The state’s sales and use tax rate is 7 percent. There are also local sales taxes levied. When combined with the average local rate, sales tax in Tennessee bumps up to 9.55 percent, the second highest rate in the U.S. behind Louisiana, according to the Tax Foundation.

A caveat regarding sales tax in Tennessee: Food items are taxed differently, at 4 percent. Also, there are other special tax rates in the state, including an 8.25 percent tax on cable and satellite services.

Other things to know about Tennessee taxes

• Tennessee has some of the lowest property taxes in the U.S.: The effective (average) property tax rate is 0.48 percent, according to the Tax Foundation.
• There is no inheritance or estate tax.
• The gasoline tax is 27.4 cents per gallon.
• The cigarette tax is 62 cents per pack.
• Marijuana is illegal in Tennessee but hemp-derived cannabinoids such as CBD oil are legal. They are taxed at 6 percent, in addition to the standard 7 percent state sales tax.