Tennessee Taxes for Tax Year 2025 (Filed 2026): Sales, Property, Business, and More

Tennessee is unusual compared to many states: there is no Tennessee state income tax on wages and salaries.
That does not mean “no taxes,” it means the tax mix leans heavily toward sales tax, local property taxes, and business taxes for entities that operate in the state.
This guide focuses on what most residents, movers, and small business owners actually run into, plus practical examples you can copy and adjust.

Tennessee Tax Snapshot

• No Tennessee state income tax on wages or salaries for Tax Year 2025 (Filed 2026).
• Sales tax is statewide and often high once local rates are added; food is taxed differently than many other items.
• Property tax is local and varies by county and city; Tennessee uses assessment ratios before the tax rate is applied.
• Many businesses owe Tennessee business taxes, including franchise and excise for certain entity types, and a separate business tax that can apply at the state and city level.
• Tennessee does not impose a state inheritance tax.

No State Income Tax on Wages

Tennessee does not tax wages and salaries, so most employees do not file a Tennessee income tax return for their paycheck income.
You still may deal with federal income tax filing and withholding, plus FICA taxes, but Tennessee itself does not add a wage-based income tax.

Sales and Use Tax

Tennessee’s sales tax has a state rate plus local rates that vary by location.
The state also has special rules that can matter for big-ticket purchases, including a “single article” cap on the local portion and an additional state tax that can apply within a defined price band.
For the current general rate, the food rate, and the single-article rule details, see Due Dates and Tax Rates.

What Most People Notice First

• Everyday purchases: Your combined rate depends on where the sale happens or where an item is delivered.
• Groceries: Food and food ingredients are taxed at a different state rate than many other items, and local tax can still apply.
• Big-ticket items: The local tax is capped on the first portion of a single item, and a separate state rule can add tax in a middle price band.

Example 1

If your combined sales tax rate is 9.75% and you buy a taxable item that costs $200, your estimated sales tax is $19.50.
That is $200 × 0.0975 = $19.50, for an estimated total of $219.50.

Example 2

Assume your total rate on food (state food rate plus local) is 6.25% and your grocery bill is $150.
Your estimated tax is $9.38 because $150 × 0.0625 = $9.375, which rounds to $9.38.
Your actual total depends on your local rate and what items qualify as food versus prepared food or other taxable categories.

Example 3

Tennessee has special handling for the local portion of tax on a single item, plus an additional state tax that can apply in a specific price band.
Here is a simplified illustration you can adjust:

• Price of a single item: $4,000
• Assumed local rate: 2.25%
• State general rate (illustration): 7%

Estimated state tax at 7% on $4,000 is $280.00.
Estimated local tax at 2.25% applies only to the first $1,600 of the item, which is $36.00.
Estimated additional state single-article tax at 2.75% applies to the $1,600 band from $1,600 to $3,200, which is $44.00.
Total estimated tax is $360.00, and the estimated total cost is $4,360.00.

Property Tax Basics

Tennessee property tax is set and collected locally, so your bill depends on your county and, if applicable, your city.
The basic math uses an appraised value, an assessment ratio based on property class, and then a tax rate expressed per $100 of assessed value.
The Tennessee Comptroller walks through the steps here: How to Figure Your Tax Bill.

How the Calculation Works

1. Start with your property’s appraised value.
2. Multiply by the assessment ratio for the property class to get assessed value.
3. Divide assessed value by 100.
4. Multiply by the local tax rate (per $100 of assessed value).

Example 4

Suppose a home has an appraised value of $400,000 and the residential assessment ratio is 25%.
The assessed value would be $100,000.
If the local tax rate is $2.50 per $100 of assessed value, the estimated tax is:
($100,000 ÷ 100) × $2.50 = 1,000 × $2.50 = $2,500.

Property tax relief programs may be available in Tennessee for certain homeowners, including some seniors, disabled homeowners, and disabled veterans.
Eligibility and benefits are program-specific and can change, so treat this as a planning prompt and confirm details with the relevant Tennessee program guidance and your local trustee.

Business Taxes You May Encounter

If you operate a business in Tennessee, your tax picture can include sales and use tax collection, a business tax based on gross receipts in certain jurisdictions, and franchise and excise taxes for many entity types.
The exact set of taxes depends on what you do, your entity type, and where you have locations or nexus.

Franchise and Excise Taxes

Many business entities doing business in Tennessee can be subject to franchise and excise taxes.
The excise tax is based on net earnings, and the franchise tax is based on a measure tied to the business’s presence in Tennessee, subject to minimums.
Due dates often line up with the 15th day of the fourth month after the fiscal year ends for calendar-year taxpayers, that is typically April 15 in 2026 for a 2025 year-end.

Example 5

Assume a calendar-year business has $120,000 of Tennessee taxable net earnings for 2025, and its franchise tax base measure is $200,000.
A simplified estimate is:

• Excise tax estimate: $120,000 × 6.5% = $7,800
• Franchise tax estimate: $200,000 × 0.25% = $500
• Combined estimate: $8,300 (before credits, adjustments, and any other limitations that apply)

This is a simplified illustration to show the moving parts, not a substitute for computing your actual base, deductions, apportionment, and applicable credits.

Business Tax Based on Gross Receipts

Tennessee’s business tax is separate from sales tax.
It can apply at the state level and, in certain places, at the city level.
In general terms, many businesses that sell goods or services and exceed a gross receipts threshold within a county and or city register and file; smaller businesses may instead need a local business license without an annual business tax return, depending on receipts and the specific jurisdiction rules.
Rates vary by classification, and minimum tax rules can apply even when calculated tax is low.

Common Planning Mistakes to Avoid

• Assuming “no income tax” means “no tax burden,” sales tax and local property tax can be major factors.
• For big purchases, ignoring single-article rules can make your estimate noticeably off.
• For new businesses, mixing up sales tax with business tax, they are different systems with different filing logic.
• For multi-location businesses, forgetting that thresholds and filing can be evaluated per jurisdiction and per location.

Quick Checklist for Tax Year 2025 (Filed 2026)

• If you only earn wages: plan around federal filing, Tennessee typically does not require a wage income tax return.
• If you are buying a home: learn your county and city rates, and understand assessed value math before you estimate your bill.
• If you run a business: confirm which Tennessee taxes apply to your activity, register correctly, and calendar your filing due dates.
• If you sell online into Tennessee: confirm whether you have economic nexus and whether a marketplace facilitator collects on your behalf.