No income tax, high sales tax
TN's ~9.55% average combined sales tax (state 7% + local up to 2.75%) hits consumption. A household spending $40K/yr on taxable goods pays ~$3,800 in sales tax — still far below most states' income tax on a $90K salary.
Nashville's growth premium
Nashville and Austin were the two big no-tax migration magnets post-2020. Nashville home prices rose ~45% from 2020–2024, eroding some of the tax advantage for buyers who arrived late.
TN for remote workers
Keeping a CA or NY salary while living in TN means zero state tax on TN-worked days — but your old state may claim tax if you travel back for work. Track workdays carefully.
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Read the guideFAQ
Does Tennessee have any income tax?
No. Wages were never taxed, and the Hall Tax on investment income was fully repealed January 1, 2021.
How does TN fund government without income tax?
Primarily sales tax — 7% state plus up to 2.75% local, among the highest combined rates in the country.
Is TN a good state for retirees tax-wise?
Yes — no tax on Social Security, pensions, or retirement withdrawals, though sales and property taxes still apply.
For a city-specific version of this, see New York City take-home pay after city tax.
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