About Tennessee's Tax System (sales, credit, income)

[Missourian11]

Tennessee along with New Hampshire has no income taxes; however, they do tax dividends and interest.

What does that mean exactly?

If I draw interest on my savings, is that taxable?

[J&Em]

Simple interest on a savings account is not taxed.


The TN government website has a pretty helpful section on this: Individual Income Tax Frequently Asked Questions (http://www.tn.gov/revenue/faqs/indincome.htm - broken link) Go down to 7 and 8 for examples of both taxable and non taxable interest and dividends.


According to it the following are among the examples of NON taxable interest:
On savings accounts, checking accounts, and money market accounts located inside or outside Tennessee. (Not money market funds - See Taxable Dividends)
On credit union accounts or certificates of deposit (No income from a credit union is taxable.)

[RSMTN]

If I read the tax code correctly simple interest on savings accounts is not taxable. But.........you will get nailed for capital gains on investments to the tune of 6%. Go make some intelligent investments so you can share your wealth with the state of Tennessee. On the other hand, if you happen to loose money don't expect the state to reimburse you 6% of your loss....just thinking.

There is a bill in the works to increase the amount of money you make (gross income from all sources) before this tax kicks in. If I remember correctly the cap is just above the poverty level........that makes great sense for retired people!

With a sales tax as high as Tennesse has the state should be able to survive without messing with people's investments.

End of rant.

[Beretta]

There are already a lot of threads on this subject which has been discussed to death. Please use the advanced search to find those threads.