Tennessee has no state property tax. Property taxes are locally determined and collected.
The Tennessee state tax is five percent on food and food ingredients and seven percent on all other tangible personal property, unless specifically exempted. There is no tax on prescription drugs. Tennessee cities and counties have the option of imposing an additional local option sales tax. See following paragraph for additional local option sales tax.
Local taxes are set by the local government. Any county or incorporated city, by resolution or ordinance, may levy a tax on the same privileges that are subject to the state’s sales or use tax. The local tax rate may be anything up to 2.75%. Our local tax rate is set at 2.75%, this makes a total of 7.75% on food and food ingredients and 9.75% on all other tangible personal property, unless specifically exempted.
There is no state personal income tax in Tennessee. However, there is the Hall Income Tax, strictly on interest from bonds and notes and dividends from stock. Beginning with tax year 2012, the annual Hall Income Tax standard income exemptions for taxpayers 65 years of age or older increases from $16,200 to $26,200 for single filers and from $27,000 to $37,000 for joint filers.
Retirees can nurture their nest egg by relocating to a state with lower taxes. Tennessee has a perk for retirees: Dividends and interest are the only forms of income that Tennessee taxes.
Hall Income Tax
The Hall Income Tax is imposed only on individuals and other entities receiving interest from bonds and notes dividends from stock.