Tennessee does not have an individual income tax on wages or salaries. Tennessee has a flat 6.50 percent corporate income tax rate (excise tax), a 7.00 percent state sales tax rate, and an average combined state and local sales tax rate of 9.61 percent. Tennessee has a 0.52 percent effective property tax rate on owner-occupied housing value. Tennessee does not have an estate tax or inheritance tax. Tennessee’s gas tax is 27.4 cents per gallon, and its cigarette excise tax is $0.62 per pack of 20 cigarettes.
Tennessee raises tax revenue primarily through general sales taxes (46.7 percent of total state and local tax revenue), other taxes (23.5 percent), and property taxes (20.8 percent). Tennessee collects $4,912 in state and local tax collections per capita, carries $5,883 in state and local debt per capita, and has a 115 percent funded ratio of public pension plans. Tennessee’s tax system ranks 8th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Tennessee is no exception. Use the tabs below to compare Tennessee taxes with other states and to see how Tennessee raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
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Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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Short FormWhat do The Rolling Stones, NFL star Tyreek Hill, and Maryland millionaires have in common? They all moved because of taxes.
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In recognition of the fact that there are better and worse ways to raise revenue, our Index focuses on how state tax revenue is raised, not how much. The rankings, therefore, reflect how well states structure their tax systems.
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The differences in purchasing power can be large and they have significant implications for the relative impact of economic and tax policies across the United States.
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The state EV taxation landscape reflects the evolving transportation sector and the pressing need to address both fiscal gaps in road funding and environmental concerns.
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Any move to repeal the cap or enhance the deduction would disproportionately benefit higher earners, making the tax code more regressive.
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Property taxes are the primary tool for financing local governments and generate a significant share of state and local revenues.
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If the policy goal of taxing cigarettes is to encourage cessation, vapor taxation must be considered a part of that policy design.
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As more and more states move away from throwback or throwout rules, those states that still impose these rules are becoming less attractive for businesses, which are incentivized to relocate their sales activities to non-throwback states.
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California pumps out the highest state gas tax rate of 77.9 cents per gallon (cpg), followed by Illinois (66.5 cpg) and Pennsylvania (62.2 cpg).
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However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
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