How taxes work in Tennessee
Sales tax. Tennessee charges a 7% statewide sales tax, and counties, cities and special districts add their own on top — which is why the average combined rate of about 9.55% is the number that matters at the till. Groceries are taxed at a reduced 4% state rate, plus local taxes — Tennessee has among the highest average combined sales taxes in the US.
Property tax. At an average effective rate of about 0.67%, a $350,000 home in Tennessee carries roughly $2,345 a year in property tax before exemptions. That is near the middle of US states. Local assessors set actual bills, so verify with the county for any specific property.
Income tax. No tax on earned income (its investment-income Hall tax was fully repealed in 2021). Remember that 'no income tax' states fund services through other taxes — compare the full picture (sales, property) before assuming a move saves money.
Sales tax · average combined
Property tax · average effective
Chart: DailyFinance.tools · Rates are reviewed averages from our state tax dataset — your exact local rate may differ.
How Tennessee compares with similar states
The states closest to Tennessee on average combined sales tax. Property tax is the average effective rate; income tax shows the structure, not a single rate.
| State | Combined sales tax | Property tax | Income tax |
|---|---|---|---|
| Tennessee (this page) | 9.55% | 0.67% | None |
| Louisiana | 9.56% | 0.55% | Flat |
| Arkansas | 9.44% | 0.62% | Progressive |
| Washington | 9.38% | 0.87% | None |
| Alabama | 9.29% | 0.42% | Progressive |
| All-state average (51 entries) | 6.61% | 1.04% | — |
What this means for your money in Tennessee
Tennessee does not tax wages, and its property tax is not carrying the load either: the average effective rate of 0.67% ranks 38 of 51, below the all-state average of 1.04%. On a $400,000 home that is about $2,680 a year. Read with the sales tax above, Tennessee is a genuinely low-tax state on the three taxes most households pay.
Read together: Tennessee combines an average combined sales tax of 9.55% (rank 2 of 51), an average effective property tax of 0.67% (rank 38 of 51) and no state tax on wages. A household comparing states should compare all three against its own pattern — a high earner who rents weighs the income tax most; a homeowner on a fixed income weighs the property tax most.
Major cities in Tennessee
Nashville, Memphis, Knoxville, Chattanooga, Clarksville. Combined sales-tax rates differ between these cities — sometimes by more than a full percentage point inside the same state — because county and city layers stack on the state base. The Tennessee sales tax guide breaks down the calculation and links the calculator where you can enter your exact local rate.
Calculators for Tennessee residents
- Tennessee Sales Tax Guide & Examples — what you actually pay, with worked amounts.
- Sales Tax & VAT Calculator — add or extract tax at any rate, including your exact Tennessee local rate.
- Mortgage Calculator — include Tennessee property tax in the monthly payment.
- Property Tax Calculator — estimate a specific property's bill.
- Self-Employment Tax Calculator — federal SE tax for Tennessee freelancers.