Does Tennessee Have a Income Tax?
No, and it never will. Tennessee does not have a state income tax on wages. However, it does tax certain investment income, like dividends and interest from bonds and notes. This lack of a traditional income tax on wages is one reason why Tennessee is sometimes seen as tax-friendly for residents. At the time I am writing this there is a 6.5% corporate tax rate.
There are only 9 states in the country that do not have a state income tax. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, New Hampshire, and Wyoming. Thanks to a state government that is wise with it’s spending Tennessee is in such a strong financial position that years ago our state House and Senate voted to change the state constitution so that there never can be a state income tax.
This is one of the many reasons why Tennessee has made so many lists, such as Best Place to Retire and even cities like Chattanooga have made lists as best small city to live in and Best Place To Retire In The South. There have been more and more corporate headquarters that have moved to Tennessee because of the political environments in the states that they are in. Large corporations are looking at not only what makes business sense but also where would their people be happy and thrive.
There are only 16 states that have a AAA rating and Tennessee is one that is always on that list. One of the major reason why is that we do not have much debt. The State of Tennessee has not borrowed money in over 45 years for a road project. No road projects in Tennessee start without having the funding in place. One of the other factors is 3.3% unemployment rate. That is lower than the federal government and ranks us in the middle of the list with other states.
When you are looking to move to our area this is something to consider. We are touched by 8 states that do have Income Taxes and we get asked all the time if they can not find a house should they look in Georgia, Alabama or any of the others. This is something that we can not answer for our clients but I can say that most do their homework and decide that Tennessee is the right choice for them.
