State retirement tax · Tennessee
Retirement tax rules for Tennessee residents (2026 guide)
Tennessee taxes no individual income at all since the Hall tax on interest and dividends was fully repealed in 2021. Retirees here pay through one of the country's highest combined sales taxes, and many counties offer a property-tax freeze for homeowners 65 and older.
By Mindaugas Laucius · Last reviewed October 21, 2026
Rate on retirement income
0%
Taxes Social Security?
No
Approx. tax on $90k retirement income
$0
Pension carve-outs
Yes
Quick figures: a single filer with $90,000 of income, $30,000 of it Social Security.
Income tax: none since 2021
Social Security, pensions, IRA and 401(k) withdrawals, and investment income are all free of Tennessee tax. The Hall income tax, which once reached interest and dividends, was phased out and ended in 2021, and Tennessee repealed its inheritance tax in 2016.
Sales tax is the main cost
The state rate is 7%, and local option taxes push the combined rate to about 9.5%–9.75% in much of the state. Groceries are taxed at a reduced 4% state rate plus the local rate, so food stays taxable here, unlike in Florida or Texas.
Property-tax freeze and relief for 65+
Counties and cities can adopt Tennessee's property-tax freeze: once you qualify at 65+, the tax on your home is held at that year's amount. Eligibility depends on a county income limit — for example, $63,470 in Wilson County for tax year 2026 — so check your county trustee. Separately, the state-funded Tax Relief program pays part of the bill for lower-income seniors, disabled homeowners and disabled veterans.
Source: UT MTAS — property tax relief for the elderly and disabled ↗
Worked examples
Sales tax on a year of spending
- $40,000 of taxable non-food purchases × 9.75% (a high combined rate) = $3,900.
- $8,000 of groceries × (4% state + 2.75% local) = $540.
About $4,440 a year — the price of living with no income tax.
Retirement income
- $70,000 of IRA withdrawals + $30,000 of Social Security + $12,000 of dividends.
Tennessee income tax: $0.
Recent and pending changes
- Hall income tax fully repealed for tax years after 2020.
Run your own numbers — pick Tennessee in the calculator’s Taxes tab for a year-by-year estimate. Or compare all 50 states and DC.
Thinking about a move? The free state-to-state retirement tax comparison puts Tennessee next to any other state on your own income.
Tennessee questions
Does Tennessee tax dividends or interest now?
No. The Hall tax on interest and dividends ended in 2021, so Tennessee has no income tax on any source.
Who runs the Tennessee senior property-tax freeze?
Your county (and sometimes city) — it's a local option. Apply through the county trustee; income limits differ by county and are set each year.
Are groceries taxed in Tennessee?
Yes, at a reduced 4% state rate plus the local rate, which is higher than in most states.