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
Property Tax Details
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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Sources — Tennessee tax data
Last verified 2026-04-16
- TN Department of Revenue — Individual Income Taxaccessed 2026-04-16
- TN Comptroller — Property Tax Reliefaccessed 2026-04-16
- Tax Foundation — State and Local Sales Tax Rates 2024accessed 2026-04-16
- WalletHub — Property Taxes by State 2024accessed 2026-04-16
- Kiplinger — Taxes in Retirement: Tennesseeaccessed 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.