Tennessee does not impose an individual income tax

# Summary

Tennessee does not impose an individual income tax. There is no Tennessee individual income tax return, and no Tennessee withholding on wages.

Two things make Tennessee different from the other states in this set, and both are traps for anyone working from older material:

• Tennessee did tax some individual income until recently. The Hall income tax on interest and dividends was fully repealed beginning January 1, 2021. Returns for 2020 and earlier years were real obligations.
• Some of the Department's own published guidance on the Hall tax is still written in the present tense. See "Reading the Department's Hall income tax material" below before quoting any HIT- article as current law.

Scope: this determination covers individuals. Tennessee imposes a 6.5 percent excise tax measured by net earnings on entities that give their owners limited liability, which is an income-measured tax in everything but name. See "What Tennessee does impose".

# Tennessee Department of Revenue statement

The Department states the position directly in GEN-34, Income Tax Withholding (last updated August 13, 2024):

"Most state laws require employers to withhold income tax for both residents and nonresidents employees for state income taxes. However, Tennessee has no state income tax on earned income and therefore has no withholding requirements. The Tennessee Hall income tax was levied on individuals and entities receiving interest from bonds and notes and dividends from stocks. Hall income tax was repealed January 1, 2021."

On the repeal itself, HIT-3, Hall Income Tax Repealed Beginning January 1, 2021:

"The Hall income tax is being phased out through December 31, 2020. The tax is fully repealed beginning January 1, 2021."

Together these cover both halves of individual income in Tennessee: earned income was never subject to a state income tax, and the one tax that did reach individual investment income no longer exists.

# Reading the Department's Hall income tax material

The Department has kept its Hall income tax guidance online for taxpayers still dealing with pre-2021 years. That archive is grouped under the heading "Hall Income Tax [Repealed for Tax Years Beginning January 1, 2021]", but the articles inside it were written while the tax was live and several were never rewritten into the past tense.

HIT-1, Tennessee Income Tax on Interest and Dividend Income (dated March 26, 2022), still reads:

"Tennessee imposes a limited income tax on certain dividend and interest income. There is no state income tax on earned income."

The second sentence remains true. The first does not describe current law — the tax it refers to is the Hall income tax, repealed as of January 1, 2021. The present-tense phrasing is an artifact of the article's age and its retention for historical reference, not a statement that Tennessee currently taxes dividends and interest.

Anyone quoting a HIT- article should check it against GEN-34 and HIT-3 first. The practical rule: HIT- material is authoritative for tax years 2020 and earlier, and is not authority for anything from 2021 forward.

# What Tennessee does impose

This page is limited to the individual income tax. The most important thing it does not cover is the franchise and excise tax, which is measured by income at entity level.

From the Department's Franchise & Excise Tax Manual:

"Franchise and excise tax is imposed on entities that operate in Tennessee and offer their owners limited liability protection. In-state and out-of-state entities can both be subject to franchise and excise tax. These taxes are accrued taxes imposed on the privilege of doing business in this state or by exercising the corporate franchise."

"Tennessee imposes a 6.5% corporate excise tax on the fiscal year net earnings of all persons engaged in business in Tennessee except nonprofit entities, entities otherwise specifically exempt, and businesses not subject to excise tax, such as sole proprietors."

The manual defines "net earnings" as "a taxpayer's federal taxable income or loss before the operating loss deduction and special deductions," with adjustments required under Tennessee excise tax law. The governing statutes are Tenn. Code Ann. §§ 67-4-2001 et seq. (excise) and §§ 67-4-2101 et seq. (franchise), with rules at Tenn. Comp. R. & Regs. 1320-06-01-.01 et seq.

The distinction that matters. A Tennessee LLC or limited partnership pays excise tax on its net earnings, but its individual members and partners owe no Tennessee income tax on their distributive shares. The tax lands on the entity, not the owner. A sole proprietor is outside the excise tax and, having no individual income tax either, owes neither — which is why Tennessee reads as a no-income-tax state for unincorporated individuals but decidedly not for entities offering limited liability.

# Filing consequences

There is no Tennessee individual income tax return, and no Tennessee income tax withholding, estimated payment, or extension regime for individuals. GEN-34 states the withholding consequence directly: because there is no state income tax on earned income, there are "no withholding requirements."

Federal obligations are unaffected.

Historical filings remain a live issue only for old years. A taxpayer with an unfiled or amended Hall income tax return for a tax year beginning before January 1, 2021 still deals with that year under the Hall tax rules; the Department retains the HIT- guidance and prior rate tables for exactly that purpose.

An entity with limited liability protection may owe franchise and excise tax and file Form FAE170, regardless of the absence of an individual income tax.

# Coverage and verification

Tax years covered: 2025.

Verified on 2026-08-13 against the Tennessee Department of Revenue's GEN-34 (as updated August 13, 2024), HIT-3, and HIT-1 as then published on the Department's help desk, and against the Department's Franchise & Excise Tax Manual as published in this library.

The Department's own "Does Tennessee have an income tax?" help-desk article was not usable as an authority: it now sits behind a sign-in wall. GEN-34 carries the same statement and is publicly accessible, so it is cited instead.

No change to Tennessee's treatment of individual income was identified for tax year 2025.

# Sources

Tennessee Department of Revenue, GEN-34 — Income Tax Withholding — https://revenue.support.tn.gov/hc/en-us/articles/360057595051-GEN-34-Income-Tax-Withholding

Tennessee Department of Revenue, HIT-3 — Hall Income Tax Repealed Beginning January 1, 2021 — https://revenue.support.tn.gov/hc/en-us/articles/360057828631-HIT-3-Hall-Income-Tax-Repealed-Beginning-January-1-2021

Tennessee Department of Revenue, HIT-1 — Tennessee Income Tax on Interest and Dividend Income (cited only as an example of retained pre-repeal phrasing) — https://revenue.support.tn.gov/hc/en-us/articles/360057352952-HIT-1-Tennessee-Income-Tax-on-Interest-and-Dividend-Income

Tennessee Department of Revenue, Franchise & Excise Tax Manual, as published in this library.