Finding a good Tax Levy in Tennessee can be challenging. It’s important to find a tax professional that has experience dealing with the state and local taxes in Tennessee. A tax specialist can help negotiate a payment plan, file an appeal, or address any other taxes related issue. TaxCure uses a unique ranking algorithm to match you with the best tax professional for your situation. To get started, click the “find a tax pro” button at the top of the page.
Property taxes account for the majority of local revenue in nearly every county in Tennessee. This is no coincidence, as property tax is one of the most efficient and equitable methods to collect taxes, in terms of equalizing property values across the state and providing a strong incentive to invest in a community’s infrastructure and services. Despite this, the tax is not without its problems, with some counties struggling to keep pace with growth in property value while others struggle to generate sufficient revenue.
Tennessee has no personal income tax, meaning that retirement savings and Social Security benefits are not subject to tax at the state level. However, the Volunteer State does have some of the highest state and local sales taxes in the country, thanks to a statewide sales tax rate of 7 percent that is supplemented by rates of up to 2.75 percent at the county or municipality level.
While many states are moving to eliminate their income taxes, Tennessee has no plans to do so in the near future. In fact, Gov. Bill Lee’s proposed budget includes a $410 million cut to the franchise tax on businesses, a move that would lower the rate to 4.5%.
Affluent households in the state benefit significantly from its tax system, which ranks 8th overall on the 2025 State Tax Competitiveness Index. The top 1 percent of households in the state earn an average of $945,000 a year and pay just 2.8 percent of their income in taxes, which is among the lowest in the nation.
However, the state’s high taxes and complex collection process have a disproportionate impact on some residents. The bottom 20 percent of households in the state earn an average income of just $10,000 per year, but face the 14th highest state and local tax burden in the country. In comparison, the top 1 percent of households in the state spend just 1.3 percent of their income on taxes. The disparity is even greater when looking at a county’s property tax effort. This is because, in most cases, multiple authorities — including county governments, municipalities, and special school districts — tap into the same property tax capacity at different levels of effort. In addition, different localities impose differing rates on the same property.
Leave a Reply