Tennessee Tax Rate

Editor’s Note: Income tax rates vary from state to state, depending upon marital status and income. But Tennessee is not one of them. If you’re wondering “Does Tennessee have state income tax?” the answer is “yes”. But it’s a bit different than other states. Learn more about the Tennessee tax rate here.

While 32 states, plus the District of Columbia, have an income tax structure that mimics the federal government’s progressive tax system, Tennessee is not one of them.

Tennessee used to have a flat tax rate. But according to the Tennessee Department of Revenue, the state income tax is being eliminated, and the applicable tax rate for each year of the phase out is as follows:

• 4% of taxable income for tax years beginning January 1, 2017
• 3% of taxable income for tax years beginning January 1, 2018
• 2% of taxable income for tax years beginning January 1, 2019
• 1% of taxable income for tax years beginning January 1, 2020

(Repeal starts January 1, 2021)

There is a flat tax that applies to income earned from interest and dividends, however. In 2019, the tax was 2%. In addition, the state’s cities don’t tax income on a local level.

So, Are There Tennessee Tax Brackets?

Income earned in Tennessee is taxed in brackets at the same rate, thus there are not tax brackets to report. The only Tennessee tax bracket is 1% in tax year 2020.

More Help With Taxes in Tennessee

Understanding your tax obligation is important. What’s even more important is how to deduct Tennessee tax from your federal taxes as an itemized deduction.

So, get help with H&R Block Virtual! With this service, we’ll match you with a tax pro with Tennessee tax expertise. Then, you will upload your tax documents, and our tax pros will do the rest! We can help with your TN taxes, including federal deductions for paying state taxes.

Prefer a different way to file? No problem – you can find Tennessee state tax expertise with all of our ways to file taxes.