In this second part of the halftime report for Tax Foundation Forum: Making Sense of Profit Shifting, we discuss the key takeaways from the first half of our series on profit shifting (read part I here). In this post, we...
The facts on Tennessee’s Tax Climate
6%Individual Income TaxFlat rate
6.5%Corporate Income TaxFlat rate
$799Property 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 19th highest among states levying an individual income tax. Tennessee's income tax collections per person were $28 in 2012 which ranked 3rd 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 25th lowest among states levying a corporate income tax. Tennessee's state and local corporate income tax collections per person were $191 in 2012 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 5.95%. The average local sales tax rate is an additional 2.45%. Tennessee's state and local governments collect $1325 per person in general sales taxes and $451 per person in excise taxes, for a combined figure of $1776, which ranks 10th highest nationally. Tennessee's gasoline tax stands at 21.4¢ (12th 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 $799 per person in property taxes in 2012, which ranks 9th lowest nationally.
State and local property tax collections per capita by state
Tax Freedom Day Arrives on April 5th 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 2014, Tennessee taxpayers worked until April 5th (4th earliest nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Kentucky, April 8th (ranked 7th earliest nationally); Virginia, April 24th (ranked 11th latest nationally); North Carolina, April 14th (ranked 23rd earliest nationally); Georgia, April 12th (ranked 17th earliest nationally); Alabama, April 7th (ranked 5th earliest nationally); Mississippi, April 2nd (ranked 2nd earliest nationally); and Arkansas, April 12th (ranked 17th earliest nationally).
Tennessee's State and Local Tax Burden Below National Average
Tennessee's 2011 tax burden of 7.6% ranks 6th lowest out of 50 states, and is below the national average of 9.8%. Tennessee's taxpayers pay $2777 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 2015 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, 26th, Virginia, 27th, North Carolina, 16th, Georgia, 36th, Alabama, 28th, Mississippi, 18th, and Arkansas, 39th.
State Business Tax Climate Index (full study)
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