State Tax in Tennessee: Nashville Real Estate and MLS

Tennessee is one of the few states left that does not have a state income tax.

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Nashville and Tennessee State Income Tax

Nashville has the added financial benefit for the working person in that their income is not subject to a state income tax. If you then combine this with the relatively low property taxes and real estate values then Nashville and Tennessee can be a very attractive place to live purely in economic terms!


Add that to the overall quality of life, abundance of state parks, lakes, golfing facilities, arts and entertainment, sports, shopping, travel infrastructure and many more reasons then you'll find Nashville is a hard place to beat when it comes to relocation.

You should be aware that the sales tax in Tennessee is a little higher than other states at 9.25%

Here are some of the legal reasons why Nashville and Tennessee will not have a state income tax anytime in the foreseeable future:

Tennessee would have to change it's Constitution to allow an income tax as it is currently illegal:


1.) Article II, Section 28 reads, in part, "The Legislature shall have the power to levy a tax upon incomes derived from stocks and bonds that are not taxed ad valorem."


2.) Article XI, Section 9. "The General Assembly shall not authorize any municipality to tax incomes, estate, or inheritances, or to impose any other tax not authorized by Sections 28 or 29 of Article II of this Constitution."


Besides being clearly outlined in the above excerpts from the Tennessee state Constitution, the Tennessee Supreme Court has ruled on this issue in the past:


- In 1932, in Evans v. McCabe, the Tennessee Supreme Court held that a tax on personal income enacted by the Legislature was unconstitutional.


- In 1960, in Jack Cole Co. v. MacFarland.


- In 1964, in Gallagher v. Butler, in unanimous opinions by the five judges, the Supreme Court quoted with approval and followed the ruling of the Supreme Court in Evans v. McCabe.