Taxes in Nashville
Tennessee levies zero state income tax on wages, retirement income, or Social Security -- a genuinely strong, structural selling point among the handful of true no-income-tax states -- but that comes paired with one of the highest combined sales tax rates in the country: Tennessee's average combined state-and-local rate ran about 9.61% in mid-2026 per the Tax Foundation, the second-highest in the nation behind only Louisiana.
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Learn moreZero State Income Tax, Not Just a Low One
Tennessee's Hall Income Tax -- a 6% tax on investment income (dividends and interest) only, dating to 1929, and one that never applied to wages even while active -- was fully phased out and repealed effective January 1, 2021. Since then, Tennessee residents owe no state tax on wages, self-employment income, business income, capital gains, dividends, interest, pension income, Social Security benefits, or retirement-account withdrawals of any kind. A 2014 amendment to the Tennessee Constitution separately prohibits the state or any local government from levying a tax on payroll or earned personal income going forward, making this a structural, not merely a current-policy, feature of the state.
Tennessee's Combined Sales Tax Rate Is the Second-Highest in the Nation
Tennessee's state sales tax rate is 7.00% -- already one of the higher state-level rates in the country -- and the Tax Foundation's mid-2026 report cited an average combined state-and-local rate of about 9.61%, the second-highest in the U.S. behind only Louisiana's 10.13%. For Nashville/Davidson County specifically, Avalara and SalesTaxHandbook cited a combined minimum rate of 9.25% (the 7.00% state rate plus a 2.25% Davidson County local-option rate); a separate aggregator's page described a wider 9.75%-10.25% range for 'Nashville,' which appears to reflect either a different retrieval date or a conflation with other Tennessee cities' higher local rates (Memphis, Murfreesboro, Kingsport, Cleveland, and Johnson City were separately cited around 9.75% in Tax Foundation data) rather than a confirmed Nashville-specific figure -- this discrepancy is disclosed rather than resolved.
No State Estate or Inheritance Tax
Tennessee completely repealed its inheritance tax for deaths occurring after December 31, 2015, and levies no state-level estate tax or gift tax either. The federal estate tax exemption for 2026 is $15 million per individual ($30 million for married couples) under 2025 federal legislation -- relevant only to a small share of estates, but a genuine, if secondary, tax advantage layered on top of Tennessee's zero-income-tax position.
Property Taxes (Summary -- See Full Topic Page)
Property tax is the more complicated, disputed category for a Nashville homeowner specifically -- effective rates were cited anywhere from 0.57% to 0.81% across sources this session, further complicated by Nashville's real two-district (Urban Services vs. General Services) tax structure tied to its consolidated city-county government. See the property-taxes topic page for the full breakdown; this summary intentionally does not repeat that detail.
Key takeaways
- Tennessee levies zero state income tax on wages, retirement income, capital gains, or Social Security -- the Hall Income Tax on investment income was fully repealed effective January 1, 2021, and a 2014 constitutional amendment bars taxing earned income going forward.
- Tennessee's combined state-and-local sales tax rate averaged about 9.61% in mid-2026 (Tax Foundation) -- the second-highest in the nation behind Louisiana (10.13%); Nashville/Davidson County's specific combined rate was cited at 9.25% by some sources, though another source's wider 9.75%-10.25% range was not confirmed as Nashville-specific and is disclosed as a discrepancy.
- Tennessee has no state estate or inheritance tax (repealed for deaths after December 31, 2015); the federal estate tax exemption for 2026 is $15M per individual.
- Property tax is the more disputed category for Nashville homeowners specifically -- effective rates ranged 0.57%-0.81% across sources, layered on top of the county's real two-district tax structure; see the property-taxes topic page.
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