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.
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
State tax revenue collections were down 5.5 percent in FY 2020, driven by a dismal final quarter (April through June) as states began to feel the impact of the COVID-19 pandemic. While these early losses are certainly not desirable, they are manageable and far better than many feared.
16 min read
Nineteen states had notable tax changes take effect on July 1, 2020. Pandemic-shortened sessions contributed to less—and different—activity on the tax front than is seen in most years, and will likely yield an unusually active summer and autumn, with many legislatures considering new measures during special sessions.
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While it’s unclear how soon state economies may be able to fully open again, it’s not too early for states to consider how they can remove barriers to businesses & consumers resuming activity.
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Another 1.4 million Americans filed initial regular unemployment benefit claims, the eleventh week of a decline in the rate of new claims, but still among the highest levels in U.S. history. The total number of new and continued claims now stands at 19.3 million, a marked decline from the peak of 24.9 million a month ago.
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Our updated 2020 edition of 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.
1 min read
From remote sales tax collection to taxes on marijuana and vaping products, we recap the top state tax trends from 2019 and break down which ones you should watch for in 2020.
38 min read
If a state must offer a “holiday” from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive.
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