Does Tennessee Tax Retirement Income? No, It's $0 (2026)

Tennessee does not tax any of your retirement income. The state has no income tax at all, so Social Security, pensions, IRA withdrawals, 401(k) distributions, and investment income are all free of state tax.1 The old tax on interest and dividends is gone.

This guide covers what Tennessee retirement income tax means today, what the Hall tax repeal changed, and what you still owe.

In This Guide

• The Short Answer
• Tennessee Retirement Income Tax at a Glance
• How Tennessee Retirement Income Tax Works
• What the Hall Tax Repeal Changed
• What You Still Pay in Tennessee
• Frequently Asked Questions
• Next Steps

The Short Answer

Tennessee taxes none of your retirement income. There's no state income tax to file and no state withholding on a pension or IRA.

This wasn't always quite true. For decades Tennessee had no tax on wages but did tax certain interest and dividend income through the Hall income tax. That tax is now gone. According to the Tennessee Department of Revenue, the Hall income tax was fully repealed for tax years beginning January 1, 2021.1 Since then, Tennessee has had no personal income tax of any kind.

So whether you're asking about pensions, Social Security, 401(k) withdrawals, or dividend income, the state answer is the same. Tennessee taxes none of it.

Tennessee Retirement Income Tax at a Glance

Here's how each common income source is treated at the state level.

Every state-tax entry reads "None," including interest and dividends, which used to carry the Hall tax.1 That column is the whole story now.

How Tennessee Retirement Income Tax Works

It doesn't. No income level triggers it, and nothing is exempt only up to a cap, because there's no income tax to cap.1

A pension, a required minimum distribution, a Social Security check, a stream of dividend income: Tennessee taxes all of them at zero. There's no Tennessee retirement exclusion to claim and no senior credit, because you owe no state income tax. You also don't file a Tennessee income tax return.

Relocating in retirement is a big decision, and the tax rules reward getting the details right. If you're moving to Tennessee, set up residency cleanly. The state taxes residents at zero, but a former state may still tax income earned while you lived there. Get a Tennessee driver's license, register to vote, and document the move.

What the Hall Tax Repeal Changed

For most of Tennessee's history, the catch was the Hall income tax. It didn't touch wages or pensions, but it taxed certain interest and dividend income at a flat rate until lawmakers began phasing it out.

That mattered for retirees, who often live partly on dividends and interest from taxable investment accounts. Under the old Hall tax, a retiree with significant dividend income could owe Tennessee tax even though the state didn't tax wages.

The legislature phased the rate down over several years and eliminated it entirely for tax years beginning January 1, 2021.1 Today there is no Hall tax to plan around. A retiree living on dividends and interest now owes Tennessee nothing on that income, the same as someone living on a pension.

What You Still Pay in Tennessee

No income tax doesn't mean no taxes. Tennessee funds itself in other ways.1

Federal income tax. The IRS still taxes pension income, traditional IRA and 401(k) withdrawals, and often part of Social Security benefits. How much of your Social Security is taxable depends on your total income, so a Tennessee retiree with other income can still owe federal tax on part of those benefits. Moving to Tennessee zeroes out the state bill, not the federal one.

Sales tax. This is where Tennessee leans. The state rate is 7 percent, and local governments add up to 2.75 percent, so the average combined rate is about 9.61 percent, among the highest in the country. Groceries are taxed at a reduced state rate of 4 percent. Sales tax is the state's main revenue source, and day-to-day spending carries it.2

Property tax. Tennessee property taxes are set locally and are moderate compared with many states. Tennessee also runs a property tax relief program and, in participating counties, a tax freeze. Homeowners 65 or older with combined income at or below the annual limit (about $37,530 for the current cycle) can qualify for the relief program, and totally and permanently disabled veterans qualify with no income limit.3 See our senior property tax relief guide for how Tennessee's programs work.

No estate or inheritance tax. Tennessee repealed its inheritance tax for deaths on or after January 1, 2016, and has no separate state estate tax, so your estate owes no state-level death tax.4 The federal estate tax can still apply, but only to very large estates above the federal exemption.

For families weighing how retirement income covers care, start with our guide on how to pay for senior care, our framework for building a senior care funding plan, and our overview of retirement accounts for care.

Next Steps

• If you're moving to Tennessee, establish clean residency so your former state can't keep taxing you. Tennessee itself taxes none of your retirement income.1
• If you own a home, check whether you qualify for Tennessee's senior property tax relief or freeze.
• Plan your federal withdrawals. No state tax doesn't change your federal bill.
• Map income against care costs. Read our guide to paying for senior care and retirement accounts for care.

Learn More

Find personalized help planning retirement income for senior care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.