Your Tennessee paycheck
What Tennessee workers keep after taxes
For decades, Tennessee was not quite a true no-income-tax state. The Hall Tax — named after the 1929 legislation — imposed a flat tax on interest and dividend income (reaching 6% at its peak). Wages were always exempt, but investors and retirees with portfolio income paid the tax. In 2016, the legislature passed a six-year phase-out, reducing the rate by 1% each year until it hit 0% on January 1, 2021.
Since 2021, Tennessee has been fully income-tax-free on all income types: wages, interest, dividends, capital gains, and retirement distributions. Your paycheck reflects only federal deductions:
| Gross salary | Federal tax | FICA | Take-home | Monthly |
|---|---|---|---|---|
| $50,000 | $3,820 | $3,825 | $42,355 | $3,530 |
| $75,000 | $7,670 | $5,738 | $61,592 | $5,133 |
| $100,000 | $13,170 | $7,650 | $79,180 | $6,598 |
Single filer, standard deduction $16,100, 2026 federal brackets.
Worked example: $80,000 salary in Nashville
A healthcare administrator earning $80,000 in Nashville files single. Taxable income is $63,900 ($80,000 minus $16,100). Federal income tax totals $8,770: 10% on $12,400 ($1,240), 12% on $38,000 ($4,560), and 22% on $13,500 ($2,970). Social Security takes $4,960 (6.2%), Medicare takes $1,160 (1.45%). Total taxes: $14,890. Take-home: $65,110 per year, or $5,426 per month.
In neighboring Georgia (where the top marginal rate reaches 5.49%), the same salary would lose roughly $2,800–$3,200 to state income tax. That is about $250 per month — a meaningful amount for savings or debt repayment. North Carolina (4.5% flat rate) would cost about $2,875 in state tax.
The trade-off shows up at the cash register. Tennessee’s 9.61% combined sales tax means a $30,000 car purchase costs roughly $2,883 in sales tax, compared to about $2,000 in Georgia (4%+local). Over a year of typical spending, the extra sales tax might total $1,000–$1,500 above a median-rate state — less than the income-tax savings at this salary level.
Nashville’s rapid growth has pushed housing costs above the Tennessee average but they remain well below comparable cities like Austin or Denver. For workers relocating from coastal cities, the combined paycheck boost and lower housing cost can increase effective disposable income by 20%–30%.
The flip side
Tennessee's trade-off: the nation's highest sales tax
Tennessee replaces income-tax revenue with the highest combined sales tax in the country. Understanding this trade-off is critical for evaluating your real cost of living.
Sales tax: 9.61% combined average
Tennessee’s state sales tax rate is 7.0% — the highest state rate in the nation. Local taxes add up to 2.75%, bringing the average combined rate to 9.61% (Tax Foundation, July 2026). Groceries are taxed at a reduced rate of 4.0% (state portion), but they are not exempt. This grocery tax disproportionately affects lower-income households.
Property tax: among the lowest
Tennessee’s effective property tax rate averages roughly 0.56%, well below the national median. This partially compensates for the high sales tax, especially for homeowners who spend modestly.
| Tax type | Tennessee | National median |
|---|---|---|
| State income tax | 0% | ~4.5% |
| Combined sales tax | 9.61% | ~6.6% |
| Effective property tax | ~0.56% | ~1.00% |
| Grocery tax (state rate) | 4.0% | 0% (most states exempt) |
Who benefits most in Tennessee?
High earners benefit most because the income-tax savings dwarf the extra sales tax paid. A worker earning $100,000 saves roughly $4,000–$5,000 vs. a 5% income-tax state, while the additional sales tax cost at $60,000 of taxable spending is about $1,800 above a median-rate state. Low earners, however, may find the grocery tax and high sales tax offset much of the paycheck advantage.
Tennessee’s rapid corporate relocations — including major moves by AllianceBernstein, Amazon operations and Oracle — signal that the no-income-tax environment is reshaping the state’s economy beyond music and tourism. For workers following these companies or joining Nashville’s growing healthcare and fintech sectors, the paycheck advantage is compounded by above-average job growth.
See how Tennessee compares to all nine no-tax states in our full guide, or compare with Georgia or North Carolina next door.
Questions
Tennessee salary after taxes FAQ
Does Tennessee have a state income tax?
No. Tennessee has no state income tax on wages, salaries or any personal income as of 2021. The Hall Tax on interest and dividends was the last remaining income tax; it was phased out over six years and fully repealed on January 1, 2021.
What happened to the Tennessee Hall Tax?
The Hall Tax was a flat tax on interest and dividend income (not wages) that reached 6% at its peak. In 2016, the legislature passed a phase-out reducing the rate by 1% per year. It dropped to 0% on January 1, 2021, making Tennessee fully income-tax-free for the first time.
How much is taken from a paycheck in Tennessee?
Only federal taxes: federal income tax based on your bracket, Social Security at 6.2% on wages up to $184,500, and Medicare at 1.45%. On a $75,000 single salary, about $13,408 is deducted, leaving roughly $61,592 in take-home pay.
What is the take-home pay on $100,000 in Tennessee?
A single filer earning $100,000 takes home approximately $79,180 per year after federal taxes and FICA. That is about $6,598 per month. No state income tax is deducted.
Why is Tennessee's sales tax so high?
Tennessee relies on sales tax as its primary revenue source since it has no income tax. The 7.0% state rate is the highest in the country, and with local additions the average combined rate reaches 9.61%. The state also taxes groceries at a reduced 4.0% state rate, unlike most states that exempt them.
Does Tennessee tax retirement income?
No. Tennessee imposes no state tax on Social Security benefits, pensions, 401(k) or IRA withdrawals, or any retirement income. The state also has no estate or inheritance tax.
Is Nashville affordable on a six-figure salary?
A $100,000 salary provides strong purchasing power in Nashville, where the cost of living is near the national average. The no-income-tax paycheck advantage of $79,180 take-home goes further here than in cities like Austin, Denver or Seattle, though Nashville housing costs have risen significantly since 2020.
Are there any local income taxes in Tennessee?
No. No city or county in Tennessee levies a local income tax. The only local taxes are property tax and the local portion of sales tax (up to 2.75% on top of the state 7.0%).
- Sources: Tennessee Department of Revenue (no income tax; Hall Tax repealed Jan 1, 2021; 7.0% state sales tax) · IRS Rev. Proc. 2025-32 · SSA 2026 wage base $184,500 · Tax Foundation (combined sales tax 9.61%, July 2026).
- 🔄 Last updated 2026-07-28 · Tax year 2026
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