Tennessee Tax Climate for Retirement

Tennessee has a significant program to attract retirees to the state, and thus has a very friendly tax climate for retirement. For starters, Tennessee is one of the few states that does not have a state income tax. It does, however, have a tax on income from interest and dividends on stocks and many bonds, which in most cases will affect retirees. Bottom line, as a retiree you will probably be better off tax-wise retiring in Tennessee than almost any other state. For more information go to taxes in Tennessee


Overall Tax Burden

Tennessee's state and local tax burden is one of the lowest in the U.S. The Tax Foundation estimates its total tax burden at 8.3% of income, 44th highest nationally.


Income Tax

Income from dividends and interest is taxable, but not earned income. The rate is a low 6%.


Pension income is not taxed

Pension income is not taxed.


Property Tax

Per capita property taxes are some of the lowest in the U.S.


Sales Tax

Tennessee charges 7% sales tax, higher than average. Some towns add an additional sales tax. Cigarette and gasoline taxes are lower than average.


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