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The facts on Tennessee’s Tax Climate
6%Individual Income TaxFlat rate
6.5%Corporate Income TaxFlat rate
$795Property TaxCollections Per Capita
Tennessee's Individual Income Tax System
Tennessee's personal income tax system consists of a flat rate of 6%, which applies to interest and dividend income only. That rate ranks 20th highest among states levying an individual income tax. Tennessee's income tax collections per person were $27 in 2010 which ranked 7th lowest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Tennessee's Corporate Income Tax System
Tennessee's corporate income tax system consists of a flat rate of 6.5%. That rate ranks 22nd lowest among states levying an corporate income tax. Tennessee's corporate tax collections per person were $142 in 2010 which ranked 11th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita
50-State Table of State Corporate Income Tax Collections Per Capita
Tennessee Sales and Excise Taxes
Tennessee levies a 7% general sales or use tax on consumers, which is above the national median of 6%. The average local sales tax rate is an additional 2.44%. Tennessee's state and local governments collect $1268 per person in general sales taxes and $368 per person in excise taxes, for a combined figure of $1636, which ranks 10th highest nationally. Tennessee's gasoline tax stands at 21.4¢ (15th lowest nationally), while its cigarette tax stands at $0.62 (13th lowest nationally.)
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
Tennessee Property Tax Collections Relatively Low
Tennessee's state and local governments collected approximately $795 per person in property taxes, which ranks 9th lowest nationally.
State and local property tax collections per capita by state
Tax Freedom Day Arrives on April 2nd in Tennessee
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2013, Tennessee taxpayers worked until April 2nd (3rd earliest nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Kentucky, April 6th (ranked 10th earliest nationally); Virginia, April 20th (ranked 10th latest nationally); North Carolina, April 10th (ranked 21st earliest nationally); Georgia, April 9th (ranked 18th earliest nationally); Alabama, April 5th (ranked 7th earliest nationally); Mississippi, March 29th (ranked earliest nationally); and Arkansas, April 7th (ranked 12th earliest nationally).
Tennessee's State and Local Tax Burden Below National Average
Tennessee's 2010 tax burden of 7.72% ranks 3rd lowest out of 50 states, and is below the national average of 9.9%. Tennessee's taxpayers pay $2707 per capita in state and local taxes.
Tennessee's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009
Tennessee's 2013 Business Tax Climate Index Ranks 15
Tennessee ranks 15th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes, and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Kentucky, 24th, Virginia, 27th, North Carolina, 44th, Georgia, 34th, Alabama, 21st, Mississippi, 17th, and Arkansas, 33rd.
50-State Comparison of Business Tax Climates (data only)
2013 State Business Tax Climate Index (full study)
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