How Do Nashville’s Taxes Compare for New Residents?

by Nik Shewmaker

“How do Nashville’s taxes compare for people moving here?”

Tennessee is one of the most tax-friendly states in the U.S. There’s no state income tax, but newcomers should be aware of sales and property tax rates when budgeting for a move to Nashville.

💰 State Income Tax

Tennessee does not tax wages or retirement income.
This makes it especially attractive for professionals, entrepreneurs, and retirees relocating from higher-tax states like California, Illinois, or New York.

🛍️ Sales Tax

Tennessee has one of the highest combined sales tax rates in the country.
Statewide base rate: 7%
Davidson County additional rate: ~2.75%
Combined, expect around 9.75% sales tax on most purchases in Nashville.

🏡 Property Taxes

Davidson County’s average effective property tax rate: ~0.74%, lower than the national average.
Example: On a $450,000 home, you’ll pay about $3,300/year in property taxes.
Rates can vary in surrounding counties like Williamson or Wilson, where some are slightly lower.

🚗 Vehicle Taxes & Fees

Tennessee does not levy an annual vehicle property tax.
Newcomers will pay standard registration fees (around $75–$125 annually).

🎯 Why Taxes Matter for Relocation

When compared to states with high income and property taxes, Nashville often provides significant savings—money that can go toward housing, lifestyle, or retirement planning.