Tennessee: No State Income Tax
Tennessee eliminated its last remaining personal income tax, the Hall Tax on investment income, in January 2022, making it fully income-tax-free. Nashville has emerged as a significant relocation destination for tech and professional workers from the coasts, with a growing tech sector and no state income tax.
Tennessee has no state income tax. $0 in state income taxes on wages or investment income. Federal income tax still applies to all income — "no state income tax" refers to state-level taxation only.
Tennessee has no tax on wages, salaries, bonuses, or investment income as of 2022. On a $150,000 salary, a Tennessee resident pays $0 in state income taxes. The same income in California or New York would generate $11,000 to $22,000 in state income taxes depending on the specific jurisdiction and income composition.
Nashville's growth as a business hub has been notable. Amazon's HQ2 operations hub, Vanderbilt University Medical Center, and a growing cluster of healthcare tech companies anchor a diversified professional economy. Cost of living in Nashville has risen but remains meaningfully below San Francisco, New York, and increasingly Austin.
Tennessee's state sales tax (7% state rate, among the highest in the US) is the primary trade-off. For high-income earners, the absence of income tax almost always outweighs the sales tax burden on net.
Using Tennessee's tax advantage in negotiations
When a Tennessee-based employer or a remote role with Tennessee domicile is on the table, the income tax advantage is worth naming explicitly in compensation discussions. A $160k Nashville salary may net more take-home than a $175k San Francisco salary after state taxes and COL differences. The Compare Job Offers tool models these tradeoffs with your actual numbers.
Other states with no income tax
Nine US states currently have no personal state income tax. Each has different trade-offs in property tax, sales tax, and cost of living.
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Total Comp CalculatorFrequently asked questions: Tennessee income tax
Does Tennessee have a state income tax?
No. Tennessee eliminated its last income tax, the Hall Tax on dividends and interest, in January 2022. Tennessee residents pay no state income tax on wages, salaries, bonuses, or investment income.
What taxes do Tennessee residents pay?
Tennessee relies primarily on a high sales tax rate (7% state + up to 2.75% local, making the combined rate among the highest in the US) and property taxes. There is no personal income tax.
Tax rates shown reflect the best available 2026 information and are provided for informational purposes only. State income tax rates, brackets, and rules change frequently. This page is not tax advice. Consult a qualified tax professional for advice specific to your situation. © CompCalc — compensationcalculator.xyz