Tennessee Income
Tax Rates & Rules
Tennessee does not levy a state individual income tax on wages, so no state income tax is withheld from your paycheck.
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Tennessee Has No State Income Tax
Tennessee is one of the states that does not levy a broad individual income tax on wages. Employees working in Tennessee do not have state income tax withheld from their paychecks, though federal income tax, Social Security and Medicare still apply.
Tennessee does not impose an individual state income tax on wages, salaries or other earned income in 2026. Employees therefore do not calculate Tennessee personal income tax brackets, a Tennessee standard deduction or Tennessee wage income tax liability.
Tennessee also no longer taxes individual interest and dividend income under the former Hall Income Tax. The Hall tax was fully repealed for tax years beginning January 1, 2021, so Tennessee has no general individual income tax return comparable to the personal income tax returns required by many other states.
Source: Tennessee Income Tax Withholding
Source: Tennessee Hall Income Tax Repeal
Does Tennessee Have a State Income Tax in 2026?
No. Tennessee has no state individual income tax on earned income in 2026 and does not require employers to withhold Tennessee income tax from ordinary wages.
| Income Tax Item | 2026 Tennessee Treatment |
|---|---|
| Tax on wages and salaries | No Tennessee individual income tax |
| State wage withholding | No Tennessee income tax withholding requirement |
| Hall tax on interest and dividends | Repealed for tax years beginning January 1, 2021 |
| Individual state income tax brackets | None |
| General Tennessee personal income tax return | Not required because Tennessee has no general individual income tax |
Federal income tax rules still apply. Tennessee residents can also have tax obligations to another state when income is sourced to that other state under its laws.
What Happened to the Tennessee Hall Income Tax?
The Hall Income Tax was Tennessee's former limited tax on certain interest from bonds and notes plus dividends from stock. It did not operate as a broad tax on wages.
The General Assembly reduced the Hall tax rate in stages and fully repealed the tax for tax years beginning January 1, 2021. As a result, Tennessee residents do not owe Hall tax on 2026 interest or dividend income.
Source: Tennessee Hall Income Tax Section
Do Tennessee Employees File a State Income Tax Return?
Tennessee employees generally do not file a Tennessee individual income tax return for wages, salaries, investment income or retirement income because the state does not currently impose a general personal income tax.
This does not eliminate the need for a federal income tax return. It also does not eliminate another state's filing requirement when a Tennessee resident earns income that another state can tax.
Taxpayers with business entities should also distinguish personal income tax from Tennessee franchise and excise taxes, which are separate business-level taxes.
Does Tennessee Tax Retirement Income?
Tennessee does not impose a general individual income tax on pension income, Social Security, 401(k) distributions, IRA distributions or other retirement income in 2026.
The repeal of the Hall Income Tax also means Tennessee no longer has its former limited personal tax on taxable interest and dividends. Federal tax treatment can still apply to retirement or investment income.
Do Tennessee Residents Pay Tax to Other States?
A Tennessee resident can still owe income tax to another state when income is earned, sourced or connected to that state under the other state's laws.
For example, an employee who lives in Tennessee but physically works in a state with individual income tax may have filing or withholding obligations there. Remote work and multistate employment rules vary, so the work state's current sourcing rules should be checked.
Tennessee Income Tax vs. Federal Income Tax
The absence of Tennessee individual income tax does not remove federal income tax obligations.
- Federal income tax can still apply to wages and other taxable income.
- Social Security and Medicare payroll taxes can still apply to employee wages.
- Federal estimated tax can apply to self-employment or investment income when federal withholding is insufficient.
- Federal income tax filing requirements are separate from Tennessee state tax rules.
A Tennessee income tax page should therefore explain the state-level 0% treatment without implying that an employee's entire paycheck is tax-free.
Tennessee Business Taxes Are Different From Individual Income Tax
Tennessee businesses can have franchise and excise tax obligations even though individuals do not pay a Tennessee personal income tax.
The Tennessee excise tax is generally a 6.5% tax on net earnings from business conducted in Tennessee for taxable entities. The franchise tax is a separate privilege tax generally based on a business tax base such as net worth. These are business taxes, not an individual wage income tax.
| Tax | Who It Generally Applies To | Not the Same As |
|---|---|---|
| Individual income tax | No general Tennessee tax in 2026 | Federal individual income tax |
| Excise tax | Taxable business entities | Employee wage withholding |
| Franchise tax | Taxable business entities | Personal state income tax |
Source: Tennessee Excise Tax
Source: Tennessee Franchise Tax
Tennessee Income Tax Withholding and Paychecks
A normal Tennessee paycheck should not include a Tennessee state income tax withholding line for ordinary wage income.
Federal income tax, Social Security, Medicare and authorized deductions can still reduce take-home pay. If a worker has multistate wages, another state's withholding can also appear depending on the employee's work location and applicable state law.
To estimate federal taxes and other payroll deductions, use the Tennessee Paycheck Calculator.
Frequently Asked Questions
What Is the Tennessee Income Tax Rate for 2026?
Tennessee has no general individual income tax on wages or other earned income, so the state individual wage income tax rate is effectively 0%.
Does Tennessee Tax Interest and Dividends in 2026?
No. The Hall Income Tax was fully repealed for tax years beginning January 1, 2021.
Do Tennessee Employees Need a State W-4?
No Tennessee wage income tax withholding certificate is needed for ordinary state income tax because Tennessee has no state wage withholding requirement.
Does Tennessee Tax Social Security or Pension Income?
Tennessee does not impose a general individual income tax on Social Security, pensions, 401(k) distributions or IRA distributions.
Do Tennessee Residents File a State Individual Income Tax Return?
Generally no for ordinary personal income because Tennessee does not impose a general individual income tax.
Does Tennessee Have Business Income Taxes?
Tennessee can impose franchise and excise taxes on taxable business entities. Those taxes are separate from individual income tax.