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?
Get facts about taxes in your state and around the US
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.
122 min read
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.
2 min read
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?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
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.
5 min read
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.
9 min read
Congress chose to exempt forgiven Paycheck Protection Program (PPP) loans from federal income taxation. Many states, however, remain on track to tax them by either treating forgiven loans as taxable income, denying the deduction for expenses paid for using forgiven loans, or both.
11 min read
Individual income taxes are a major source of state government revenue, accounting for 37 percent of state tax collections in fiscal year (FY) 2017. Several states had notable individual income tax changes in 2020: Arizona, Arkansas, Massachusetts, Michigan, Minnesota, North Carolina, Ohio, Tennessee, Virginia, and Wisconsin.
22 min read
States compete with each other in a variety of ways, including in attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. Prolonged periods of net outbound migration, however, can strain state coffers, contributing to revenue declines as economic activity and tax revenue follow individuals out of state.
4 min read
While many factors influence business location and investment decisions, sales taxes are something within lawmakers’ control that can have immediate impacts.
12 min read
Twenty-six states and the District of Columbia had notable tax changes take effect on January 1, 2021. Because most states’ legislative sessions were cut short in 2020 due to the COVID-19 pandemic, fewer tax changes were adopted in 2020 than in a typical year.
24 min read
The coronavirus relief package represents the second-largest recovery legislation, behind only the CARES Act, for a combined total of more than $3 trillion in support.
8 min read
On Monday, members of the bipartisan Gang of Eight negotiating an end-of-year pandemic relief package announced that they had settled on language and had divided the package into two bills: a pandemic aid package and a $160 billion state and local support package.
6 min read
A typical American household with four phones on a “family share” wireless plan can expect to pay about $270 per year (or 22 percent of their cell phone bill) in taxes, fees, and surcharges.
36 min read
President Joe Biden’s tax plan would yield combined top marginal state and local rates in excess of 60 percent in three states: California, Hawaii, and New Jersey (also New York City).
4 min read
