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Retire in Tennessee: 2026 Tax & Cost of Living Guide

Genuine no-income-tax state since the Hall Tax was eliminated in 2021. No tax on SS, pensions, 401(k)s, IRAs, capital gains, or interest. Low property tax (0.63%) with senior relief programs. High combined sales tax (~9.55%) is the one meaningful retiree cost.

State income tax

None

Social Security

Not taxed

Estate tax

None

Property tax

0.63%

How Tennessee Taxes Retirement Income

Social Security
Not taxed
Public pensions (state/federal)
Not taxed
Private pensions
Not taxed
401(k) / IRA withdrawals
Not taxed

Exemption / exclusion

Not applicable — Tennessee has no state income tax of any kind

Capital Gains in Tennessee

Tennessee does not tax capital gains, dividends, or interest. The Hall Income Tax on dividends and interest (previously 1-6%) was fully eliminated effective tax year 2021.

Top Cities for Retirees in Tennessee

Knoxville

$2,045/month estimated cost of living

Nashville

$2,826/month estimated cost of living

Property Tax Details

Effective rate (WalletHub 2024)0.63%
Avg combined sales tax (state + local)9.57%

Tennessee 'Property Tax Relief' program: reimburses qualifying homeowners 65+ with household income under ~$33K (2024 threshold) for property taxes owed on the first $29,000 of their home's assessed value. Separate 'Property Tax Freeze' in participating counties freezes the property-tax amount for qualifying seniors.

What Tennessee Retirees Need to Know

Hall Tax eliminated 2021

Tennessee used to tax interest and dividends (the 'Hall Income Tax') at rates up to 6%. The tax phased out between 2016 and 2021 and is now fully zero. TN now has zero income tax of any kind.

Highest average combined sales tax in the US

Tennessee's 7% state sales tax plus local add-ons produces the highest average combined sales tax in the country at ~9.55% (Tax Foundation 2024). For retirees spending most of their income, this is the real cost to model.

Property-tax relief for low-income seniors

Low-income homeowners 65+ can get their first $29K of assessed value reimbursed via the state Property Tax Relief program. Not universal but meaningful for modest-retirement-income residents.

Compare Against Other States

All 50 US States + DC

Ranked by tax-friendliness for retirees. Grouped by income-tax type.

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Retirement Methodology Calculators

How much do the big names actually say you need? See each guru's assumed return and withdrawal rate, side by side with academic defaults.

Dave Ramsey

12% / 8%

Bill Bengen

4% rule

Bogleheads

7% / 4%

FIRE Calculator

See how much you need to retire — in Tennessee or anywhere else.

Safe Withdrawal Rate

Model your retirement paycheck with real historical data.

Sources — Tennessee tax data

Last verified 2026-04-16

Tax rates and programs are subject to change. Data is current for 2024–2025. Always consult a qualified tax professional before making relocation decisions.