Does Tennessee Tax Social Security and Retirement Income?

Tennessee has no income tax, so Social Security is not taxed

Tennessee does not tax Social Security benefits. The only tax the state ever imposed on individual income was the Hall income tax, which applied solely to interest from bonds and notes and dividends from stock, never to wages or benefits. The Department of Revenue confirms it was repealed for tax periods beginning January 1, 2021 or later and asks residents not to file for those years. (Tennessee Department of Revenue: Hall income tax (repealed for tax periods beginning January 1, 2021 or later))

The protection for earned income is constitutional. Article II, section 28 of the Tennessee Constitution says the Legislature shall not levy, authorize or otherwise permit any state or local tax upon payroll or earned personal income, or any tax measured by them. Cities and counties are covered by the same sentence, so there is no local wage tax either. (Constitution of the State of Tennessee, Article II, section 28 (Tennessee Secretary of State))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

No Tennessee tax on any pension

Private pensions, state and local government pensions, federal civil service annuities and military retirement pay are untaxed, because Tennessee has no tax that reaches them. The Hall tax applied only to interest and dividends, and it no longer exists. (Tennessee Department of Revenue: Hall income tax (repealed for tax periods beginning January 1, 2021 or later))

A pension earned in another state is protected as well. Once the retiree is a Tennessee resident, federal law (4 U.S.C. 114) prohibits the former state from imposing income tax on retirement income, which the statute defines to include qualified pension plans, IRAs, 401(k) and 403(b) plans, section 457 plans and military retired pay. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

IRA and 401(k) withdrawals and Roth conversions carry no state tax

Withdrawals from traditional IRAs and 401(k) plans, required minimum distributions and Roth conversions are taxed only by the federal government for a Tennessee resident. Even while the Hall tax existed it did not reach retirement plan distributions, since its base was limited to interest from bonds and notes and dividends from stock. (Tennessee Department of Revenue: Hall income tax (repealed for tax periods beginning January 1, 2021 or later))

Timing matters for people moving in. Retirement income is taxed by the state where the recipient lives when it is received, so a Roth conversion completed before leaving an income-tax state is taxed there, and one completed after the move to Tennessee is not taxed by either state. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

No state tax on interest, dividends or capital gains since 2021

Interest and dividends were taxable in Tennessee from 1929 until the Hall tax was repealed. For tax years beginning on or after January 1, 2021 there is no tax and no return. Capital gains were never part of the Hall tax base, so gains on stocks, funds, real estate and business interests are untaxed by the state. (Tennessee Department of Revenue: Hall income tax (repealed for tax periods beginning January 1, 2021 or later))

The repeal of the Hall tax rests on statute, not on the constitution. The same section that bans taxes on payroll and earned income still says the Legislature has power to levy a tax on incomes derived from stocks and bonds that are not taxed ad valorem. A future legislature could therefore tax investment income again by ordinary law, though none has moved to since the repeal took effect. (Constitution of the State of Tennessee, Article II, section 28 (Tennessee Secretary of State))

There are no income tax rates, brackets, deductions or exemptions for individuals, and nothing to file with the state at tax time. A retiree’s Tennessee taxes are paid at the register and to the county trustee. (Tennessee Department of Revenue: Hall income tax (repealed for tax periods beginning January 1, 2021 or later))

Tennessee’s age-based relief is in property tax. The state Tax Relief program reimburses part or all of the property tax paid by low-income homeowners who are 65 or older, by disabled homeowners, and by disabled veterans and their surviving spouses. For the 2026 tax year an elderly applicant must be 65 on or before December 31, 2026, own the home and use it as a primary residence, and have had 2025 income of no more than $38,470, counting the applicant, spouse and any co-owners. (Tennessee Comptroller of the Treasury, 2026 Property Tax Relief Program brochure)

The Tax Freeze is a separate, local-option program for homeowners 65 or older. Where a county or city has adopted it, the tax on a qualifying principal residence is frozen at the amount owed in the first year of qualifying, even if the tax rate rises or the county is reappraised. (Tennessee Comptroller of the Treasury: Property tax freeze (participating jurisdictions and 2026 income limits))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Tennessee's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Property tax is local. County assessors appraise property, and residential property is assessed at 25% of its appraised value: a residence appraised at $400,000 has an assessed value of $100,000. County commissions and city governing bodies then set the tax rates, and county trustees and city officials collect. Counties are reappraised on a four, five or six year cycle, and values generally hold steady between reappraisals. (Tennessee Comptroller of the Treasury: Assessment vs taxation (assessment percentages, reappraisal cycle, appeals))

Tax Foundation figures drawn from Census data put Tennessee property taxes at 0.52% of owner-occupied home value in 2024, which ranks 41st among the states. On a $400,000 home that average works out to about $2,080 a year. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Tax Relief is a reimbursement, not an exemption, and it is modest. For elderly and disabled homeowners the relief is calculated on no more than the first $33,600 of the home’s market value; for disabled veterans and their surviving spouses the ceiling is $175,000. Applications are made through the county trustee, or the city collecting official for city taxes, once the 2026 bill arrives, and the deadline is 35 days after the delinquency date. (Tennessee Comptroller of the Treasury, 2026 Property Tax Relief Program brochure)

Recipients still receive their bills and remain responsible for paying them. The amount of relief varies from year to year with the assessment and the local tax rate, relief is available on a primary residence only, a spouse’s income counts whether or not the spouse is an owner, and a home held in an irrevocable trust does not qualify. (Tennessee Comptroller of the Treasury: Property tax relief (frequently asked questions))

The Tax Freeze has been adopted by 28 counties and 37 cities. The Comptroller sets an income limit for each county every year, and local governments may adopt a higher local-option limit instead. For 2026 the limit is $63,470 in Davidson, Knox, Shelby, Rutherford, Montgomery, Wilson, Blount and Robertson counties and in the city of Chattanooga, $69,150 in Williamson County, $48,550 in Sumner County and $38,470 in the lowest-limit counties. (Tennessee Comptroller of the Treasury: Property tax freeze (participating jurisdictions and 2026 income limits))

Freeze applicants must reapply and document income every year. Income from all sources of all owners counts, including Social Security after the Medicare deduction, pensions after health insurance premiums, and total interest and dividends. The freeze covers the principal residence and up to five acres, rises in proportion if the home is improved, and does not move with the owner to a new home. (Tennessee Comptroller of the Treasury: Property tax freeze (participating jurisdictions and 2026 income limits))

The general state rate is 7% on most goods and taxable services, and the state rate on food is 4%. Every local jurisdiction adds a local rate, which by law cannot exceed 2.75%. (Tennessee Department of Revenue: Sales and use tax, due dates and tax rates (7% general, 4% food, local rates up to 2.75%))

The Tax Foundation puts the average combined state and local rate at 9.61% as of January 2026, second highest in the country after Louisiana. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

The 4% rate covers food and food ingredients: groceries such as bread, meat, dairy, produce, canned and frozen foods, and also soft drinks and bottled water. Candy, dietary supplements, alcoholic beverages, tobacco and prepared food are taxed at the full 7%. The local rate applies on top in either case, so groceries can carry a combined tax of up to 6.75%. (Tennessee Department of Revenue, Sales and Use Tax Notice 17-20: Sales Tax on Food and Food Ingredients)

Prescription drugs for human use are exempt from sales tax, and insulin is exempt without a prescription. Over-the-counter drugs are taxable unless they are dispensed under a prescription. (Tennessee Department of Revenue, Sales and Use Tax Healthcare Products List (revised July 2026))

Large purchases are treated differently. In most jurisdictions the local tax applies only to the first $1,600 of the price of a single item, and a separate state single-article tax of 2.75% applies to the part of the price between $1,600 and $3,200. On a $40,000 car bought where the local rate is 2.75%, the tax is $2,800 of state tax, $44 of local tax and $44 of single-article tax: $2,888, or about 7.2%. (Tennessee Department of Revenue: Single article and special tax rates)

Tennessee has no estate tax and no inheritance tax. Its inheritance tax, which despite the name was paid by the estate on the amount above an exemption, is no longer imposed after December 31, 2015. No return is filed for anyone who died in 2016 or later, and the estates of Tennessee residents face only the federal estate tax. (Tennessee Department of Revenue: Inheritance tax (not imposed after December 31, 2015))

There is no gift tax either. The Tennessee gift tax was repealed effective January 1, 2012, so gifts made after that date are not taxed by the state, whatever their size. (Tennessee Department of Revenue: Gift tax (repealed effective January 1, 2012))

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

A 2026 law, Public Chapter 1014, allows a county with a metropolitan form of government to reduce or eliminate its local sales tax on food. The Department of Revenue’s summary of 2026 legislation lists no change to the 4% state rate on food or to the 7% general rate. (Tennessee Department of Revenue: 2026 Legislative Summaries (Public Chapter 1014))

Davidson County, which includes Nashville, has used that authority. From November 1, 2026 its local rate on food and food ingredients is 1.75%, down from the 2.25% that still applies to everything else, which makes the combined rate on groceries there 5.75%. The reduction covers every city in the county. (Tennessee Department of Revenue, Local Sales and Use Tax Notice 26-19: Local Sales Tax on Food and Food Ingredients, Davidson County)

Constitutional Amendment 2 on the November 3, 2026 ballot adds a sentence to Article II, section 28 prohibiting the Legislature from levying, authorizing or otherwise permitting any state tax on real, personal or mixed property. Local property taxes are unaffected. To pass, an amendment needs more yes votes than no votes and yes votes exceeding half of all votes cast for governor. (Tennessee Secretary of State: Proposed constitutional amendments on the November 2026 ballot)

The Secretary of State’s final unofficial results, with all 95 counties complete, show Amendment 2 receiving 1,334,067 yes votes (66.74%) to 664,715 no votes, with about 2.1 million votes cast for governor. Both tests are met on those figures; the results had not been certified when this page was reviewed. (Tennessee Secretary of State, November 3, 2026 election results: governor and constitutional amendments (final unofficial))

Tennessee has no income-tax residency test because it has no income tax. For a newcomer the live question is whether the former state still considers them a resident. After a completed move, 4 U.S.C. 114 reserves pensions, IRA distributions and 401(k) income to the state of residence, so the former state cannot tax retirement income received as a Tennessee resident. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

The Tax Freeze shows how Tennessee itself defines a home. The principal residence is the dwelling eligible as the owner’s legal residence for voting purposes, and an applicant must sign a statement that no other property has been claimed as a principal residence for any purpose in any jurisdiction. Keeping a resident-only property tax benefit on a home in the former state is inconsistent with that statement. (Tennessee Comptroller of the Treasury: Property tax freeze (participating jurisdictions and 2026 income limits))

Tennessee is not one of the nine community property states. Married couples can elect community property treatment for particular assets under state law, and IRS Publication 555 says expressly that it does not address the federal tax treatment of property subject to the Tennessee election. Couples arriving from a community property state such as Texas or California should not assume their assets keep or change character automatically. (IRS Publication 555, Community Property)