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Tennessee tax tidbit: no wage tax

Tennessee flag You might have seen Tennessee in the list of states that don't collect an income tax.

That's correct ... to a point.

The Volunteer State doesn't tax wage income, but it certainly wants its residents to hand over 6 percent of the interest they earn from bonds and notes and from dividends from stock.

This tax has been around since 1929. It originally was called the Hall income tax for the senator who sponsored the legislation. 

The state does, however, offer a break for its senior citizens.

If you're older than 65 with total income less than $16,200 as a single taxpayer or are a married couple filing jointly with less than $27,000 income, then you're exempt from the tax.

The rest of you Tennessee taxpayers with taxable unearned income, get your returns into the state by April 15.

Tax trip around the United States: This post is part of our series highlighting tax information from the 50 U.S. states and Washington, D.C. You can read other state tax blurbs at our Complete menu of tasty state tax tidbits.

The State Tax Departments page provides links to official state and District of Columbia revenue Web sites so that you can find out more about your home's tax laws and filing requirements.

As we work through the 2010 tax season, a different state will be featured each day as noted in Don't forget your state taxes! Check back to see what tax tidbit we share about your home.

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CG, thanks for the elaboration on the interest/dividends tax. Glad to see that some investment income is tax free.


Your article about Tennessee income tax is a point. The first $1250 of interest from bonds, notes, or dividends is exempt from the income tax. I live in TN and haven't yet hit that number, so have never had to file income taxes with the state.

Ed Harris

Here in Ohio, unfortunately, we do have such a tax. And with the looming healthcare changes, it is bound to increase.

There has to be a better way.

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