Taxes in Memphis
Tennessee levies no state income tax at all -- a real, structural advantage shared with other no-income-tax states covered elsewhere in this project -- but pairs that with a combined sales tax rate near the top of the nation: Memphis/Shelby County-specific figures ranged from 9.25% to 9.75% depending on source, against a 9.61% statewide average that ranks Tennessee second-highest nationally, behind only Louisiana.
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Learn moreNo State Income Tax -- A Real, Simple Structural Advantage
Tennessee has no state personal income tax on wages, retirement income, or investment income. This is a genuine, structural cost advantage relative to income-tax states, and it applies uniformly regardless of income level -- unlike states with a flat-but-nonzero rate (such as Georgia's 4.99%, covered elsewhere in this project). See the retiring topic page for how this specifically benefits retirees drawing pension, 401(k), IRA, and Social Security income, none of which Tennessee taxes.
Memphis's Combined Sales Tax Rate: A Real Source Disagreement
Tennessee's base state sales tax rate is 7.00%. For Memphis and Shelby County specifically, sources disagreed on the exact combined figure: one source (Avalara) cited a Shelby County minimum combined rate of 9.25% (7.00% state + 2.25% county), while another (SalesTaxHandbook) cited a Memphis-specific combined rate of 9.75% (7.00% state + 2.25% county + an additional 0.5% Memphis local component). This 9.25%-9.75% range is disclosed rather than collapsed into one number -- the discrepancy likely reflects whether the specific city-level 0.5% increment is included. Either figure places Memphis at or near the top of Tennessee's statewide 9.61% average combined rate (Tax Foundation, mid-2026), which itself ranks second-highest in the nation behind Louisiana's 10.13% (Louisiana passed Tennessee for the top spot in 2025 after raising its own state rate).
No State Estate or Inheritance Tax
Tennessee's inheritance tax was fully repealed effective January 1, 2016, following a phased reduction that began in 2012 (the exemption threshold rose from $1 million through 2012 to $5 million by 2015 before full repeal). Tennessee levies no state estate tax either. The repeal is not retroactive -- estates of people who died before January 1, 2016, above the exemption threshold in effect that year, remain subject to the old rules -- but for any death in 2016 or later, no state-level death tax applies in Tennessee. Federal estate tax, income tax on certain inherited retirement accounts, and probate costs remain the relevant considerations.
Property Taxes (Summary -- See Full Topic Page)
Property tax is the more genuinely disputed tax category for a Memphis homeowner specifically -- effective rates were cited anywhere from 0.61% to 1.33% across sources this session, with a rough cross-check using Tennessee's fixed 25% assessment ratio and current nominal city/county millage landing near the top of that range. See the property-taxes topic page for the full breakdown, including the two separate senior/disabled/veteran relief programs available (a statewide reimbursement and a separate Shelby County tax freeze).
Key takeaways
- Tennessee has no state income tax at all -- on wages, retirement income, or investment income -- a real, structural cost advantage applied uniformly regardless of income level.
- Memphis/Shelby County's combined sales tax rate was cited between 9.25% (Avalara) and 9.75% (SalesTaxHandbook) depending on whether a Memphis-specific 0.5% local increment is included -- either figure sits at or near Tennessee's 9.61% statewide average, the second-highest in the nation behind Louisiana.
- Tennessee's inheritance tax was fully repealed effective January 1, 2016 (not retroactive), and the state levies no estate tax -- a real advantage for estate planning, though federal estate tax still applies where relevant.
- Property tax is the more disputed category -- effective rates ranged 0.61%-1.33% across sources, with a rough math cross-check (25% assessment ratio x current nominal millage) landing near the top of that range; see the property-taxes topic page for the full detail.
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