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Tennessee State Taxes


State Income Taxes in Tennessee

The state of Tennessee does not have individual income tax. One of only 9 states in the union with no income tax!

Interest and Dividend Taxes in Tennessee

The State of Tennessee is one of only two States that have an I&D (Interest and Dividend) Tax. The other one being New Hampshire. This is probably due to it not having an individual income tax. The I&D Tax is 1.00% for residents whose total Interest and Dividend income is greater than $1,250

NOTE: S Corporation Distributions – the state of Tennessee recognizes S Corporation distributions as Dividends subject to the 1.00% I&D Tax

State Business Taxes in Tennessee

The state of Tennessee has two (2) different business taxes. A Corporate income tax referred to as an Excise Tax and a gross margins referred to as a Franchise Tax. This tax rate effects all businesses such as Corporations, S Corporations, and LLCs. 

  • Excise Tax – 6.50% tax
  • Franchise Tax – 0.02% – 0.3% tax

Sales and Property Taxes in Tennessee

Sales Tax – like many states, Tennessee has multiple tax rates. One at the state level and another at the local level. The state rate is 7.00% the average local rate is 2.53% (total average rate for Tennessee Sales Tax is 9.53%, making it the most expensive state in the union regarding Sales tax).

Property Taxes in Tennessee – the average property tax rate for residential property in the state of Tennessee is 0.73%, which is below the national average of 0.93%.

Unemployment taxes in Tennessee

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Tennessee has a wage base of $7,000 for 2020
  • UI Rates – range from 0.15% to 10.00%
  • Schedules – Tennessee has multiple rate schedules regarding Unemployment taxes.

Tennessee Business Entities – LLCs

Tennessee has an average cost to opening an LLC. Here are some important facts:

  • Tennessee’s annual LLC fee is $300
  • When you initially register, you pay an additional one time fee of $300
  • Secretary of State of Tennessee website – click here

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