Does Tennessee have a state income tax?
No. Tennessee does not tax wages or salaries, so there is no Tennessee income tax return, withholding or estimated payment for 2026. Source: TN DOR — Hall Income Tax, repealed for TY2021+.
Can you deduct Tennessee taxes on your federal return?
The federal deduction for state and local taxes (SALT) is capped at $40,400 for 2026 — $20,200 if married filing separately — and the cap shrinks toward $10,000 once modified AGI passes $505,000. With no Tennessee income tax, what counts toward it is property tax plus, if you choose it instead of income tax, general sales tax.
Itemize or take the standard deduction?What is the property tax rate in Tennessee?
Tennessee's average effective property tax rate is 0.5% — tied for the 43rd highest of 51 jurisdictions and 56% of the national average of 0.9%. That is about $500 a year for every $100,000 of home value; the rate varies widely by county and school district.
Itemize or take the standard deduction?How much does an LLC cost to keep in Tennessee each year?
Deductsy budgets about $300 a year for a Tennessee LLC — the annual report fee or minimum franchise tax, with a fee due every two years counted at half. Fees change, so confirm with Tennessee's business filing office.
Tennessee S-corp tax calculatorHow do Tennessee taxes compare with neighboring states?
| State | Top income tax rate | Income tax on $100,000 (single) | Property tax (avg) |
|---|---|---|---|
| Tennessee | None | $0 | 0.5% |
| Alabama | 5% | $4,960 | 0.38% |
| Arkansas | 3.7% | $3,620 | 0.55% |
| Georgia | 4.99% | $4,990 | 0.77% |
| Kentucky | 3.5% | $3,500 | 0.75% |
| Mississippi | 4% | $3,600 | 0.72% |
| Missouri | 4.7% | $4,555 | 0.85% |
| North Carolina | 3.99% | $3,990 | 0.66% |
| Virginia | 5.75% | $5,493 | 0.73% |
On $100,000 of taxable income a single filer pays no Tennessee income tax; in the neighboring states that tax income, the same filer would pay from $3,500 in Kentucky to $5,493 in Virginia. Tennessee's average property tax rate is higher than in 1 of 8.
Income tax is each state's own tax on the same state taxable income; local income taxes are not included.
More Tennessee tax notes
- The Hall Income Tax on investment income was eliminated in 2021.
Tax moves that matter most for Tennessee
Tennessee has no income tax on wages, so the SALT cap only matters for property tax. The bigger levers are federal: 401(k), Mega Backdoor Roth, HSA and, for the self-employed, an S-corp election.
An S-corp election can cut self-employment tax once profit is large enough to pay yourself a reasonable salary and still cover payroll and filing costs. The Tennessee calculator adds Tennessee's own entity fees and taxes to that breakeven.
With 1099 income, a Solo 401(k) can take up to $72,000 a year (2026) — usually more than a SEP-IRA at the same income. Contributions lower your federal income tax.
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