Does Tennessee Tax Retirement Income?

Tennessee has no individual income tax, so Social Security benefits is not taxed at the state level.

Tennessee does not tax Social Security benefits.

With no state return to file, the only Social Security tax question for a Tennessee retiree is the federal one: depending on combined income, up to 85% of benefits can be taxable on the federal return. Retirees comparing Tennessee with a state that does tax benefits can see the full list in our guide to states that do not tax Social Security.

Tennessee has no individual income tax, so pension income is not taxed at the state level.

Public, private, and military pension income is not subject to Tennessee income tax.

There is nothing to calculate. Tennessee never taxed wages or retirement distributions, and the one income tax it had, the Hall tax on interest from bonds and notes and dividends from stock, ended for tax periods beginning January 1, 2021. Tennessee raises revenue instead through sales tax, property tax, and business taxes.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Tennessee has no individual income tax, so traditional 401(k) and IRA withdrawals is not taxed at the state level.

Traditional 401(k) and IRA withdrawals are not taxed by Tennessee. Neither is a Roth conversion.

Because Tennessee does not tax the withdrawal, the timing of Roth conversions and required minimum distributions is a purely federal decision for a Tennessee resident. That is one reason retirees convert after establishing Tennessee residency: the conversion income is taxed federally in the year of conversion, but no state layer is added on top.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A single 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 pension owes no Tennessee tax on the $90,000. Federal tax still applies to $25,500 of the Social Security and to the $60,000 of pension and 401(k) income.

Federal AGI is about $85,500, and federal tax is computed the usual way, but there is no Tennessee individual income tax return to file for this income. Before 2021 the only Tennessee question was whether the retiree had taxable interest or dividends for the Hall tax; that tax is gone, so a brokerage account throwing off dividends is also untaxed at the state level. A $150,000 traditional IRA withdrawal in the same year adds federal tax and nothing at the state level. A married couple in the same position gets the same $0. What Tennessee does collect from this household is sales tax, which is among the higher combined state and local rates in the country, and property tax on the home.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Kentucky: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 3.50% and retirement-income exclusion up to $31,110.
• Georgia: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 4.99% and retirement exclusion up to $35,000 or $65,000.
• North Carolina: treats Social Security as exempt, pensions as taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 3.99% and bailey relief and service-conditioned military deduction.

Some retirees still remember the Hall tax and assume a dividend-heavy portfolio is taxed in Tennessee. It is not, and has not been since the 2021 tax year. The real Tennessee cost is the sales tax rate, which hits a retiree who spends most of what comes in.

Military retirement: Military retirement pay is not subject to Tennessee income tax. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Tennessee has no estate tax and its inheritance tax is not imposed for deaths after December 31, 2015. Federal estate tax can still apply.

Selling a home or investments in Tennessee: retirement-income rules do not cover capital gains. See Tennessee capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. There is nothing to calculate. Tennessee never taxed wages or retirement distributions, and the one income tax it had, the Hall tax on interest from bonds and notes and dividends from stock, ended for tax periods beginning January 1, 2021. Tennessee raises revenue instead through sales tax, property tax, and business taxes.
• Part-year residents. If you moved into or out of Tennessee during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• No state withholding to set up. Custodians withhold federal tax only for a Tennessee resident. If you moved from a state that taxes retirement income, stop that state's withholding once residency changes, and keep proof of the move date.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. A no-income-tax state makes the timing of Roth conversions purely a federal question. If you have moved to Tennessee from a state that taxes retirement income, confirm the domicile change is documented before converting or taking a large distribution, because the old state may claim the income for the year of the move.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.