How does Tennessee’s tax code compare? Tennessee does not have an individual income tax. Tennessee has a 6.5 percent corporate income tax rate and levies a state gross receipts tax. Tennessee also has a 7.00 percent state sales tax rate and an average combined state and local sales tax rate of 9.55 percent. Tennessee has a 0.48 percent effective property tax rate on owner-occupied housing value.
Tennessee does not have an estate tax or inheritance tax. Tennessee has a 27.4 cents per gallon gas tax rate and a $0.62 cigarette excise tax rate. The State of Tennessee collects $4,236 in state and local tax collections per capita. Tennessee has $7,418 in state and local debt per capita and has a 105 percent funded ratio of public pension plans. Tennessee’s tax system ranks 8th overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Tennessee is no exception. The first step towards understanding Tennessee’s tax code is knowing the basics. How does Tennessee collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
115 min read
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
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8 min read
Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
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3 min read
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An ideal sales tax applies to a broad base of final consumer goods and services, with few exemptions, and is levied at a low rate.
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Individual income tax rates can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.
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The overall U.S. tax and transfer system is overwhelmingly progressive, and understanding the extent—and source—of that progressivity is essential for lawmakers considering the trade-offs associated with each tax policy decision.
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9 min read
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
States can better position themselves for success by moving away from economically-damaging taxes like the capital stock tax.
4 min read
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4 min read