2026 Tennessee State Income Tax

Tennessee does not collect a state income tax on wages. There is no state W-4 to file, no state withholding line on your paystub, and no Tennessee state return for wage income at the end of the year. Federal income tax is your only paycheck-based tax obligation.

The 2026 Tennessee rate

0% (no state income tax)

Why Tennessee has no income tax

Tennessee historically taxed interest and dividend income under the Hall Income Tax, named after the state senator who introduced it in 1929. The Hall Tax was phased down starting in 2016 and fully repealed effective January 1, 2021. So Tennessee has had no state income tax of any kind since the 2021 tax year.

Tennessee funds itself primarily from sales tax (7% statewide plus local option, bringing the effective rate to roughly 9.5% in most of the state, among the highest combined sales-tax rates in the country), the franchise and excise tax on businesses, and various selective taxes. The relatively high sales tax is part of how Tennessee replaces income-tax revenue.

What about the old Hall Tax?

Tennessee's Hall Tax on interest and dividends was fully repealed in 2021. Wages are not taxed.

For most filers (anyone whose income is W-2 wages, interest in a normal savings account, or a 401(k)) the short answer remains the same: Tennessee state tax owed on your paycheck is $0.

What this means for your withholding

When you select Tennessee in the Breakeven calculator, the state row on your projection will show $0 owed and $0 withheld — you can't under-withhold for a tax that doesn't exist. Your federal projection covers your entire paycheck-based tax bill. The W-4 is the only payroll form you need to worry about.

How Tennessee compares to states with income tax

Tennessee funds its government through other sources: typically property taxes, sales taxes, severance taxes on natural resources, or specific industry levies. Total state and local tax burden in a no-income-tax state is not necessarily lower than in a state with an income tax; the mix is just different. For a take-home-pay comparison across states, model your federal projection in the calculator and compare it to federal brackets alone.

Sources

• Tennessee Department of Revenue — official income-tax landing page (or equivalent).
• Tax Foundation — State Income Tax Rates — cross-reference for the no-income-tax classification.

Note on state payroll surcharges. Tennessee does not collect statewide income tax, disability, or paid-leave premiums on wages. (Washington is the only no-income-tax state with statewide payroll programs the calculator currently models.) See the methodology for the full list of what is included and excluded.

Last cross-checked on 2026-04-28.

Canonical reference: https://www.breakeven.tax/brackets/2026/tennessee