Tennessee is regularly described as having "eliminated its income tax," which gets the history backwards. Tennessee never taxed wages. What it repealed was the Hall Income Tax, a narrow levy on certain interest and dividend income that most working Tennesseans never encountered.
The Department of Revenue's own page is unambiguous: "The Hall Income tax was repealed for tax periods that begin on January 1, 2021, or later." With it gone, Tennessee has no individual income tax of any kind.
A single filer earning $85,000 in Tennessee takes home $68,628.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; Tennessee's position comes from this site's own sourced 50-state dataset, citing the Tennessee Department of Revenue's Hall Income Tax page directly. Every dollar figure is computed by the same engine the site's calculators use, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Sales tax and property tax are discussed qualitatively.
1. What Tennessee takes from a paycheck: nothing
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| Tennessee income tax | $0 |
| Take-home | $68,628 |
Across incomes:
| Salary | Tennessee tax | Take-home |
|---|---|---|
| $30,000 | $0 | $25,285 |
| $45,000 | $0 | $38,338 |
| $60,000 | $0 | $50,390 |
| $85,000 | $0 | $68,628 |
| $120,000 | $0 | $93,250 |
| $175,000 | $0 | $130,879 |
There is no Tennessee return to file on wage income and no state withholding line on your pay stub.
See what your own salary leaves you in Tennessee2. Filing jointly
The single-filer figures above are the ones most often quoted. Here is the same salary as a married couple's sole income, filing jointly:
| Salary | Single take-home | Joint take-home | Difference |
|---|---|---|---|
| $45,000 | $38,338 | $40,278 | +$1,940 |
| $85,000 | $68,628 | $72,658 | +$4,030 |
| $120,000 | $93,250 | $100,780 | +$7,530 |
| $175,000 | $130,879 | $140,773 | +$9,894 |
All of that difference is federal. In a state with graduated brackets, part of the joint-filing benefit comes from the state widening its own brackets for married couples — Oregon and Minnesota both do. In Tennessee there is no state layer to widen, so the entire gap is the federal standard deduction doubling and the federal brackets widening.
That has one consequence worth naming: the joint-filing benefit is the same dollar amount in Tennessee as in every other no-income-tax state, and smaller than in most taxing states. If you are comparing a move on the strength of filing jointly, the comparison is federal-versus-federal plus whatever the other state adds.
As a share of gross, the total tax rate:
| Salary | Single | Joint |
|---|---|---|
| $45,000 | 14.81% | 10.49% |
| $85,000 | 19.26% | 14.52% |
| $120,000 | 22.29% | 16.02% |
| $175,000 | 25.21% | 19.56% |
These are effective rates, not marginal ones — the share of the whole salary that leaves, not the rate charged on the last dollar. The two get confused constantly, and the effective rate is the one that tells you what you can spend.
3. What the paycheck actually looks like
Annual figures are useful for comparison and useless for budgeting. On $85,000 as a single filer in Tennessee:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,319.76 |
| Biweekly (26) | $3,269.23 | $2,639.52 |
| Semi-monthly (24) | $3,541.67 | $2,859.48 |
| Monthly (12) | $7,083.33 | $5,718.96 |
Biweekly and semi-monthly are not the same thing, and the difference catches people out. Biweekly is 26 cheques a year — every other Friday — so two months in the year contain three paydays. Semi-monthly is 24 cheques, on fixed dates such as the 15th and the last day, so every month contains exactly two.
The annual total is identical. The monthly cash flow is not. A biweekly earner budgeting on "two paycheques a month" is under-counting by two cheques a year, which on $85,000 is $5,279 that arrives in two windfall months and is easy to spend without noticing.
Three more things a real pay stub adds that the table above does not:
Health insurance premiums, if taken pre-tax under a Section 125 plan, come off before tax and reduce FICA wages as well. A $400-a-month premium is $4,800 a year that never appears as taxable income.
Retirement deferrals reduce federal taxable income but not FICA wages, so the saving is your federal rate only.
Withholding is an estimate, not the tax. Your employer withholds based on the W-4 you filed. Over-withholding produces a refund; under-withholding produces a bill. Neither changes what you actually owe, which is what the figures above show.
Because Tennessee withholds nothing at state level, your pay stub has one fewer line than most Americans' and one fewer thing to get wrong. What pays for that is sales tax at combined rates among the country's highest, groceries included.
4. The Hall Income Tax, and what it actually reached
The Hall tax, named for the senator who sponsored it in 1929, applied to certain interest and dividend income above an exemption. It was repealed on a legislated schedule, with the rate stepping down over several years before the tax ceased entirely for periods beginning on or after January 1, 2021.
What it never touched:
Wages and salaries. Never within scope. Someone whose entire income was employment income paid nothing under the Hall tax at any point in its ninety-year life.
Social Security benefits. Outside its scope entirely.
Most retirement account withdrawals. Distributions from an IRA or 401(k) are not interest or dividends received by the individual in the ordinary case.
What it did touch: dividends from stock and interest from certain bonds, held in a taxable account, above the exemption. Retirees living on a taxable brokerage portfolio were the characteristic payers.
The Department of Revenue now instructs individuals and businesses not to file Hall returns for any tax year beginning on or after that date. The tax is not dormant at a zero rate — it is repealed, with no filing obligation attached.
Tennessee has never taxed wages or salaries. With the Hall tax gone, there is no Tennessee individual income tax rate, bracket, or return of any kind.
5. No local income tax — and the neighbours make that worth saying
No Tennessee county or municipality levies a tax on personal income or earnings. Local revenue comes from the local option sales tax and from property tax.
This is worth stating explicitly rather than assuming, because of geography. Tennessee borders eight states, and two of them do things that catch people out:
Kentucky, immediately north, has near-universal local occupational license taxes on wages. Someone living in Clarksville and working across the border may find a local wage tax withheld that has no Tennessee equivalent.
Missouri, to the northwest, has city earnings taxes in Kansas City and St. Louis.
Tennessee has nothing comparable. A Tennessee take-home figure needs no local asterisk — but a figure for someone who works across the Kentucky line may.
6. What the zero is worth
| Compared with | Their tax on $85,000 | Tennessee keeps you |
|---|---|---|
| Virginia | $4,073 | +$4,073 |
| Alabama | $3,985 | +$3,985 |
| Georgia | $3,493 | +$3,493 |
| Missouri | $3,058 | +$3,058 |
| North Carolina | $2,883 | +$2,883 |
| Kentucky | $2,857 | +$2,857 |
| Arkansas | $2,799 | +$2,799 |
| Mississippi | $2,668 | +$2,668 |
Every one of Tennessee's neighbours taxes income, so this is a real border effect rather than an abstraction. Nashville, Memphis, Chattanooga and the Tri-Cities all draw commuters from taxing states.
Scaling:
| Salary | vs. Georgia | vs. Kentucky |
|---|---|---|
| $45,000 | $1,497 | $1,457 |
| $85,000 | $3,493 | $2,857 |
| $175,000 | $7,984 | $6,007 |
Kentucky's flat rate makes its gap grow close to proportionally. Georgia's flat rate sits above a substantial exemption, so its gap starts smaller relative to income at the bottom and catches up as the exemption becomes a smaller share of the whole.
7. What Tennessee charges instead: sales tax, heavily
Tennessee's combined state and local sales tax rate is among the highest in the United States — consistently near the top by average combined rate.
That is the trade. A state that raises no income tax has to raise the money somewhere, and Tennessee raises it at the register.
Groceries are taxed
Most states either exempt groceries from sales tax entirely or tax them at a sharply reduced rate. Tennessee taxes food for home consumption at a reduced state rate, with local rates applying on top.
This matters more than the headline rate suggests, because groceries are a much larger share of a low-income household's spending than a high-income one's. It is the mechanism by which Tennessee's tax structure is regressive in practice: a household spending nearly all of its income pays sales tax on nearly all of its income, while a household saving a third of its income pays sales tax on two thirds.
The practical consequence for the border comparison above: the income tax saving against Georgia or Kentucky is largest at high incomes, where the sales tax offset is proportionally smallest. At $45,000 with most income spent, a substantial part of the $1,497 Georgia saving comes back at the register. At $175,000 with a high savings rate, most of the $7,984 stays.
Two more things the sales tax reaches
Vehicles. Tennessee charges sales tax on motor vehicle purchases, with the local portion subject to a cap on the taxable amount of a single sale. On a $35,000 car that is a four-figure line item at closing, and it is the single largest sales tax event most households experience. Budget for it separately rather than folding it into the purchase price.
Some services, but not broadly. Unlike South Dakota, Tennessee does not tax services across the board. Its base is closer to the national norm on that front — which means the comparison with South Dakota is not simply "who has the higher rate." Tennessee has the higher rate on a narrower base; South Dakota the lower rate on a much wider one.
What that means for a move between the two: if most of your spending is on goods and groceries, Tennessee's higher rate bites harder. If a large share goes to services — childcare, professional fees, repairs — South Dakota's wider base may cost you more despite the lower headline. Neither state's rate alone answers the question.
Property tax is comparatively modest
Tennessee's effective property tax rates sit below the national middle. This is a meaningful difference from Texas and New Hampshire, both of which replaced the income tax largely with property tax. Tennessee replaced it with consumption tax instead.
For a homeowner, that combination — no income tax, moderate property tax, high sales tax — is one of the more favourable structures in the country, and it is a large part of why Nashville's inbound migration has run as hard as it has.
8. The federal share
| Amount | Share of gross | |
|---|---|---|
| Federal income tax | $9,870 | 11.61% |
| FICA | $6,503 | 7.65% |
| Tennessee income tax | $0 | 0% |
| Total | $16,373 | 19.26% |
FICA still starts at the first dollar
Someone earning $12,000 in Tennessee owes no federal income tax and still pays $918 in Social Security and Medicare. Add Tennessee's sales tax on nearly everything that $12,000 buys, groceries included, and the claim that a low earner in a no-income-tax state pays nothing is wrong twice over.
9. Retirees
Tennessee taxes no retirement income of any kind. Social Security, pensions, 401(k) and IRA distributions, and — since the Hall repeal — interest and dividends are all untaxed. There is no estate or inheritance tax.
For a retiree drawing $70,000 from a mix of sources, that is a complete exemption rather than a capped exclusion. Combined with moderate property taxes, it is one of the stronger retirement tax positions available.
The sales tax is the offset, and for a retiree it bites in a specific way: retirement spending skews toward goods and services rather than savings, so a larger share of a retiree's income passes through the register than a working saver's does. Groceries being taxed compounds it.
Tennessee still comes out well for most retirees. It is not the unqualified zero the headline implies.
10. What you can still control
Every lever is federal.
Pre-tax deferrals save your federal rate only. A $10,000 traditional 401(k) contribution saves an $85,000 earner $2,200 federally. The same deferral in Georgia or Kentucky would save several hundred dollars more in state tax on top. Tax-deferred saving is worth less in Tennessee — still clearly worth doing, and the total benefit is smaller.
HSA contributions through payroll cut FICA as well as federal income tax, and the 7.65% FICA saving is state-independent — so it represents a larger share of the total benefit in Tennessee than in a taxing state.
Roth versus traditional loses one of its arguments, since there is no state rate to deduct against now and none to pay later.
And one specific to Tennessee: with the Hall tax repealed, there is no longer any state-level reason to favour growth stocks over dividend payers in a taxable account. That was a live consideration for Tennessee investors before 2021 and it is gone.
11. Working across a state line
Tennessee's eight-state border makes this unusually common.
If you live in Tennessee and physically work in another state, that state generally taxes the income as nonresident source income. Tennessee offers no credit, because Tennessee levies nothing to credit against — so you bear the other state's tax in full. Living in Tennessee does not make Georgia or Kentucky income tax-free.
If you live in Tennessee and work remotely for an out-of-state employer, income is generally sourced where the work is performed, so a Tennessee desk usually means no state income tax. Check whether the employer's state applies a convenience-of-the-employer rule; most of Tennessee's neighbours do not, but the arrangement is worth confirming rather than assuming.
If you live in another state and work in Tennessee, your home state taxes you. Tennessee's zero does not follow you home.
Kentucky's local occupational taxes deserve particular attention on the northern border, because they are withheld at the local level and are easy to overlook when comparing two job offers.
12. Moving to Tennessee
The income tax saving is real and it scales. Between $2,668 and $4,073 a year at $85,000 depending on which neighbour you are leaving, and roughly double that at $175,000.
Budget for the sales tax honestly. Take your annual spending on taxable goods including groceries, apply a combined rate in the high single digits, and subtract that from the saving. For a high earner the saving survives comfortably. For a household spending everything it earns, much less of it does.
Property tax is a genuine advantage relative to the other no-income-tax states, and it is the reason Tennessee's structure works better for homeowners than Texas's does.
Housing costs have moved. Nashville in particular is not the cheap market it was a decade ago, and a tax saving of a few thousand dollars does not offset a housing cost difference of the size that has opened up against some smaller metros.
Frequently asked questions
Does Tennessee have a state income tax? No. Tennessee has never taxed wages or salaries, and the Hall Income Tax on certain interest and dividend income was repealed for tax periods beginning January 1, 2021 or later.
What is take-home pay on $85,000 in Tennessee? $68,628 for a single filer taking the standard deduction, after $9,870 federal income tax and $6,503 FICA.
Did the Hall tax ever apply to my paycheck? No. It applied to certain interest and dividends above an exemption, never to wages and never to Social Security. Most working Tennesseans never filed a Hall return.
Can a Tennessee city or county tax my income? No. No Tennessee county or municipality levies a tax on personal income or earnings; local revenue comes from the local option sales tax and property tax.
How much does Tennessee save me against Georgia? $3,493 a year at $85,000 and $7,984 at $175,000. Against Kentucky it is $2,857 and $6,007.
What does Tennessee charge instead? Sales tax, at combined state and local rates among the highest in the country, and Tennessee taxes groceries at a reduced rate rather than exempting them. Property tax is comparatively modest.
Does Tennessee tax retirement income? No — Social Security, pensions, 401(k) and IRA distributions and investment income are all untaxed, and there is no estate or inheritance tax. Sales tax is the offset, and it reaches a larger share of a retiree's spending than a saver's.
I live in Tennessee and work in Kentucky — do I pay Kentucky tax? Generally yes, as nonresident source income, plus any local occupational license tax the Kentucky city levies. Tennessee has no tax to credit it against, so you bear it in full.
What to do next
Tennessee's paycheck answer is a clean zero with no local layer. The real work is weighing it against a sales tax structure that is among the country's heaviest.
- Tennessee take-home pay calculator — your salary with every federal deduction shown separately.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in Kentucky — the neighbour with local wage taxes almost everywhere.
- Tennessee rent affordability — what the take-home actually supports.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; Tennessee's position from this site's sourced 50-state dataset, citing the Tennessee Department of Revenue Hall Income Tax page. Sales tax and property tax are discussed qualitatively rather than computed. This is general education and not tax advice; consult a licensed tax professional for your own situation.