Tax Overview: Tennessee
Tennessee does not levy a state individual income tax. The Hall Tax on interest and dividends was fully repealed in 2021, eliminating the last form of individual income taxation. State tax issues are primarily tied to business taxes including sales/use tax (among the highest nationally at 7% plus local) and franchise/excise taxes. Individual residents primarily face federal tax obligations.
Key Tax Facts
- No state individual income tax
- Hall Tax (interest & dividends) fully repealed in 2021 — zero individual income tax
- 7% state sales tax plus local additions — among the highest combined sales tax rates nationally
- State tax issues primarily business-related (sales/use, franchise, excise)
- Federal tax obligations apply fully — IRS maintains collection authority
Common Tax Issues
Businesses face aggressive sales tax enforcement given the high combined rates
Federal tax debts remain the primary concern for individual residents
The high sales tax rate creates significant compliance burden for businesses with Tennessee nexus
Recent Tax Changes
- Hall Tax fully repealed 2021 — zero individual income tax
Official Resources
How Tax Advocate Group Helps Tennessee Taxpayers
Whether you're dealing with the IRS, the Tennessee Department of Revenue, or both — we provide comprehensive tax resolution services to Tennessee residents and businesses.