TAX & LICENSE / STATE TAX SYSTEM

Newcomers to Tennessee will be pleased to learn that the state is one of the few that does not impose a personal income tax on wages or salaries. The income tax does apply to most income from stocks, bonds, and notes receivable. Certain income is exempt, so consult the Department of Revenue for complete information or answers to your specific questions:

Tennessee Department of Revenue
Taxpayer Services
500 Deaderick Street
Nashville 615-253-0600
www.tn.gov/revenue

Pensions, Social Security & IRAs
Since the Tennessee income tax does not apply to salaries and wages, items of income such as social security and pension income are not subject to state tax. Income from stocks and bonds of pension trusts and profit sharing trusts that are exempt from federal income taxation are also exempt from state tax. This includes such accounts as IRAs and distributions from IRA accounts.

Sales & Use Taxes
Tennessee state sales and use taxes are both imposed at a rate of 7 percent. Local jurisdictions tend to raise this rate by an average of 2.25 percent. Food is taxed at 5 percent, but candy, dietary supplements and prepared food are taxed at the increased 7 percent rate. Nearly 75 percent of the sales and use tax dollars support education. Among the other major state taxes is petroleum taxes, corporate franchise taxes, and excise taxes.

Property Tax
Levied by the county and municipal governments, the property tax rates apply to each $100 of assessed value of property. The assessment ratio applied to residential property is 25 percent. Most municipalities and some special school districts impose additional tax levies. For answers to your questions or specific tax rates, contact:

County Tax Assessors

Hamilton County
423-209-7300
http://assessor.hamiltontn.gov/search.aspx