What is the Tennessee state income tax rate in 2026?
Tennessee has no state income tax in 2026: wages, pensions, IRA and 401(k) withdrawals, Social Security, interest and dividends are not taxed by the state, and neither are capital gains. The Hall income tax on interest and dividends was fully repealed for tax years beginning January 1, 2021 (Tennessee Department of Revenue; rules). Example: a married couple, both 70, with $40,000 of Social Security, a $30,000 private pension and $30,000 of IRA withdrawals ($100,000 in all; the pension and IRA money split evenly between them) owes $0 of Tennessee tax and $5,087 of federal tax; a single 62-year-old with $24,000 of Social Security, an $18,000 pension and $18,000 of IRA withdrawals ($60,000 in all) owes $0 to the state and $4,111 federal.
For retirees the bill that remains is federal: the sample couple's $5,087 is the federal income tax on the same income (Rev. Proc. 2025-32). All nine states with no income tax, compared.
Local income taxes: none in Tennessee. The local income taxes the tax engine computes for 2026 are in Delaware, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, New York, Ohio, Oregon and Pennsylvania.
Your whole 2026 return in Tennessee, federal and state together, ends in a refund or an amount owed: 2026 tax return calculator (free) → What five typical retiree households owe or get back in Tennessee and every other state: the 2026 tax return study.
Figures for 2026 from QuantCalc’s open tax engine (federal 2.6.1, state 1.28.0), for a full-year resident. An estimate, not tax advice: credits, itemized deductions and rules this page does not ask about change a real return. Every Tennessee rule with its official sources: Tennessee rules and sources.
In QuantCalc's 51-state planner study — one married couple, both 60, $2M, $80,000 a year to spend after tax, 10,000 paths per jurisdiction — the median path in Tennessee pays $162,597 of federal and state income tax and Medicare IRMAA over 30 years, with no Tennessee state income tax in any year. That ranks #1 of 51 (tied with 15 others) by lifetime tax (1 = lowest). The plan succeeds in 84.05% of paths. No state income tax means the Roth-conversion optimization is purely federal + ACA cliff.
The TN verdict
For a retiree planning withdrawals in 2026, Tennessee is one of the most retirement-tax-friendly states in the U.S. The Hall income tax was repealed in 2021, and there is no estate tax.
Since there is no state income tax, both pre-tax 401(k) distributions and Roth conversions cost $0 in state tax. That removes one variable from the optimization, but it does not eliminate the federal ACA cliff — your premium tax credit still depends on federal MAGI.
Worked example: $30k Roth conversion in Tennessee
Consider a married couple age 58 in Tennessee with $75,000 of wages (their MAGI), both on ACA Marketplace coverage. They want to convert $30,000 from a traditional IRA to a Roth. In Tennessee, the state tax on that conversion is $0 (no state income tax). But the conversion pushes their MAGI to $105,000 — over the 400% FPL cliff of $84,600. The $3,600 of federal income tax the conversion adds (the whole conversion is taxed in the federal 12% bracket) plus the whole premium tax credit they would have had at $75,000 ($26,551 a year at Tennessee's average benchmark Silver premium), the total cost of converting $30,000 is $30,151 — an effective 100.5% marginal rate. The lesson: in tax-free states, the ACA cliff IS the optimization, not state tax.
Cost breakdown
| Component | Amount |
|---|---|
| Federal income tax (12% bracket) | $3,600 |
| Tennessee state income tax | $0 |
| ACA premium tax credit clawback | $26,551 |
| Total cost on $30,000 conversion | $30,151 (100.5% effective) |
Scenario B (tax-free): $100k rip-the-bandage conversion in Tennessee
A retired couple in Tennessee aged 62 with $60,000 of Social Security and a $1.4M traditional IRA is past the ACA cliff and is no longer on Marketplace coverage. They convert $100,000 in a single 'rip the bandage' year. Federal income tax added by the conversion: $15,560 (the conversion also makes $51,000 more of their Social Security taxable, $32,200 of the added income fills deductions their Social Security left unused and the rest is taxed in the federal 10%–22% brackets). Tennessee state tax: $0. Effective cost on the $100,000 conversion: $15,560, or 15.6%. In a no-state-income-tax state, the post-cliff playbook is to convert aggressively in low-spend years rather than dripping small amounts.
What the planner's Monte Carlo says about Tennessee
QuantCalc Research ran one married couple through QuantCalc's retirement planner in each of the 51 jurisdictions: both 60, $2,000,000 ($1,400,000 traditional, $600,000 Roth), a 60/40 portfolio, $80,000 a year to spend after tax for 30 years, no Social Security, 10,000 paths each. The planner's federal and state tax engines price every year, and it picks the withdrawals and Roth conversions. Here is Tennessee beside the lowest- and highest-tax results:
| Metric | Tennessee | No state tax (16 jurisdictions) | Oregon (highest) |
|---|---|---|---|
| Median lifetime tax, federal + state + IRMAA (30y) | $162,597 | $162,597 | $309,718 |
| State income tax (30y, sum of yearly medians) | $0 | $0 | $146,914 |
| State income tax in the first year (age 60) | $0 | $0 | $5,838 |
| 30-year success rate | 84.05% | 84.05% | 80.61% |
| Median balance at 90 | $2,153,150 | $2,153,150 | $1,801,272 |
| Rank by lifetime tax (of 51, 1 = lowest) | #1 | #1 | #51 |
Across all 51 jurisdictions the success rate runs from 80.61% to 84.05%: for this couple the state changes the tax bill far more than the odds of the money lasting. Dollars are today's dollars. Source: QuantCalc 51-State Retirement Monte Carlo (v2026.3, re-run 2026-10-12) — 510,000 planner paths, methodology and dataset released CC-BY-4.0. Every jurisdiction's row uses the same household and the same market paths; only the state of residence changes.
Retiring on investment income in Tennessee
Tennessee levies no state income tax on any form of retirement or investment income. The Hall income tax — the state's former 6% levy on interest and dividends — was fully repealed in 2021, so dividends, interest, capital gains, 401(k)/IRA distributions, and Social Security are all state-tax-free. There is no state estate tax either. For a retiree living on portfolio income in Tennessee, tax optimization is a purely federal exercise: the 0%/15%/20% LTCG brackets, the ACA cliff, and IRMAA are the only levers in the model.
How Tennessee treats capital gains in retirement
Tennessee has no state tax on long-term capital gains. That makes tax-loss harvesting and gain-harvesting decisions purely federal exercises here — you keep the full federal 0%/15%/20% LTCG bracket benefit without a state-level add-on.
Why the ACA cliff hits hard in Tennessee
The 400% federal-poverty-level cliff is federal, not state-specific — but its dollar impact depends on the benchmark Silver-plan premium in your county. Tennessee's Marketplace pricing and your household composition determine the size of the subsidy at risk. A couple aged 58 with MAGI of exactly $84,600 still has $25,595 a year of premium tax credit at Tennessee's average benchmark Silver premium, and all of it is on the line. With the 2021–2025 enhanced credit expired, $1 of additional MAGI above 400% FPL eliminates the entire credit.
For 2026 the 400% FPL threshold is:
Roth conversion strategy for Tennessee
The TN-specific playbook depends on tier:
- Identify your cliff distance. Compute MAGI from all income sources (wages, capital gains, interest, dividends, traditional withdrawals). Find your headroom under 400% FPL. Use the live cliff widget above for a quick check.
- Stay under the cliff if you can. In a no-state-income-tax state like Tennessee, the cliff IS the optimization. Convert just enough to fill out your headroom — every dollar over costs the full federal PTC.
- If you must go over, convert big. Once you've crossed the cliff, additional conversion dollars only cost federal + state tax (no incremental PTC loss). A "rip the bandage" conversion year can be efficient if you have many traditional dollars to move.
- Coordinate with capital gains and the 0% LTCG bracket. Tennessee has no state tax on long-term capital gains. That makes tax-loss harvesting and gain-harvesting decisions purely federal exercises here — you keep the full federal 0%/15%/20% LTCG bracket benefit without a state-level add-on.
- Plan ahead for IRMAA. The IRMAA Medicare premium surcharge has a 2-year lookback. A Tennessee resident in their early 60s converting today will see IRMAA implications at 65. See RMD + IRMAA calculator for the lookback math.
State tax basics for Tennessee retirees
| Question | Tennessee |
|---|---|
| State income tax | None |
| Number of brackets | No brackets (no income tax) |
| Social Security taxed | No |
| 401(k) / Traditional IRA taxed | No / exempt |
| Retirement-income exclusion (couple) | None |
| Roth conversion draws that exclusion | Not applicable |
| State estate / inheritance tax | No |
| Retirement-friendliness tier | tax free |
| Notable feature | the Hall income tax was repealed in 2021, and there is no estate tax |
| 30-yr planner success rate | 84.05% |
| Median 30-yr tax, federal + state + IRMAA (rank) | $162,597 (#1/51) |
Model your full Tennessee retirement scenario
Free Monte Carlo (100 paths per run; 10,000 with PRO) with state-specific tax engine, ACA cliff, Roth conversion optimizer, IRMAA lookback — free, no signup.
Run a free simulation →What a year-end move does to your Tennessee and federal tax in 2026
Each move changes three bills at once: the federal return, the Tennessee return and, for anyone on Medicare, the IRMAA surcharge the 2026 income sets for 2028. Example: a married couple, both 72, with a $40,000 pension, $50,000 of Social Security, a $30,000 IRA withdrawal and $10,000 of long-term gains already realized in 2026, the pension, the IRA money and the conversion split evenly between them on the state return. Each row is that year with one move made, against the same year without it (negative = less tax).
| Move (by December 31, 2026) | Federal tax | Tennessee tax | IRMAA in 2028 |
|---|---|---|---|
| Convert $25,000 to a Roth IRA | $3,165 | $0 | $0 |
| Send $10,000 of the IRA withdrawal to charity as a QCD | −$1,200 | $0 | $0 |
| Harvest a $5,000 loss against the year's gains | $0 | $0 | $0 |
An estimate from QuantCalc’s open tax engine (federal 2.6.1, state 1.28.0) for the 2026 tax year. Not tax advice: your return depends on facts this page does not ask about, so check a move with your tax preparer or custodian before acting. IRMAA uses the 2026 tiers for two people on Medicare; the 2028 tiers are not published yet. How the engine computes each line, with its official source: federal, Tennessee.
Related calculators and reading
- All-states retirement tax comparison — see Tennessee alongside the other 50 jurisdictions.
- Tennessee minimum wage 2026 — the hourly rate, scheduled increases and take-home pay after tax, from the official sources.
- State Retirement Tax Data 2026 — the per-jurisdiction rate, exclusion and Social Security figures behind this page, as CSV and JSON.
- ACA Subsidy Cliff Optimizer — find the largest Roth conversion that keeps you under 400% FPL.
- Roth Conversion Optimizer — bracket-fill vs. fixed-amount strategy comparison.
- RMD + IRMAA Calculator — Medicare premium surcharge based on 2-year-old MAGI.
- Safe Withdrawal Rate Calculator — sequence-of-returns-aware withdrawal planning.
- Research: 51-State 30-year Monte Carlo (2026) — full ranking and dataset.
- Research: Monte Carlo ACA Cliff 2026 — 80,000-path study of the cliff cost.
FAQ
What is the Tennessee state income tax rate in 2026?
Tennessee has no state income tax in 2026: wages, pensions, IRA and 401(k) withdrawals, Social Security, interest and dividends are not taxed by the state, and neither are capital gains. The Hall income tax on interest and dividends was fully repealed for tax years beginning January 1, 2021 (Tennessee Department of Revenue; rules).
How much state income tax does a retiree pay in Tennessee?
It depends on the kind of income. In 2026, a married couple, both 70, with $40,000 of Social Security, a $30,000 private pension and $30,000 of IRA withdrawals ($100,000 in all; the pension and IRA money split evenly between them) owes $0 of Tennessee tax, and a single 62-year-old with $24,000 of Social Security, an $18,000 pension and $18,000 of IRA withdrawals ($60,000 in all) owes $0. Federal tax comes on top: $5,087 and $4,111.
Does Tennessee have local income taxes?
No. No county, city or school district in Tennessee levies an income tax that the tax engine computes for 2026.
Does Tennessee tax Roth conversions?
Tennessee has no state income tax, so Roth conversions cost $0 in state tax. The conversion is still a federal taxable event and can still trigger the 400% FPL ACA premium-tax-credit cliff.
What is Tennessee's 30-year Monte Carlo retirement success rate?
In QuantCalc's 51-state planner study, one married couple (both 60, $2M, 60/40, $80,000 a year to spend after tax, 10,000 paths) succeeds in 84.05% of paths in Tennessee; across all 51 jurisdictions the rate runs from 80.61% to 84.05%. The median path pays $162,597 of federal and state income tax and IRMAA over 30 years, $0 of it Tennessee state income tax.
What is the ACA cliff in Tennessee for 2026?
The ACA premium-tax-credit cliff is a federal threshold, not state-specific. For a household of two in 2026, it sits at 400% of the federal poverty level — $84,600. Crossing it by even $1 of MAGI eliminates the full subsidy now that the 2021-2025 enhanced credit has expired.
Is Tennessee a good state to retire for tax purposes?
Tennessee is one of the most retirement-tax-friendly states in the U.S. The Hall income tax was repealed in 2021, and there is no estate tax. In our planner study it ranks #1 of 51 (tied with 15 others) by median lifetime tax (1 = lowest).
Does Tennessee tax Social Security benefits?
Tennessee has no state income tax, so Social Security benefits are not taxed at the state level.
Does Tennessee tax 401(k) and IRA withdrawals?
Tennessee has no state income tax, so 401(k) and traditional IRA withdrawals are not taxed at the state level.
Does Tennessee have a state estate or inheritance tax?
No — Tennessee does not impose a state-level estate or inheritance tax.
How does Tennessee tax capital gains?
Tennessee has no state tax on long-term capital gains. That makes tax-loss harvesting and gain-harvesting decisions purely federal exercises here — you keep the full federal 0%/15%/20% LTCG bracket benefit without a state-level add-on.
Last updated 2026-10-12. Tennessee levies no state income tax, so there is no state rate schedule to apply. ACA poverty-level figures: the 2025 HHS poverty guidelines for the 48 contiguous states and DC ($15,650 for one person, plus $5,500 for each additional person; 90 FR 5917), which set 2026 Marketplace coverage. Premium tax credit estimates use Tennessee's average benchmark Silver premium. Monte Carlo numbers from the QuantCalc 51-state planner study (v2026.3, re-run 2026-10-12, CC-BY-4.0). This page is educational. Not tax, legal, or financial advice — consult a qualified advisor.