Paying Your Taxes (income, income tax, exemptions)

[TX2TN]

How do the taxes work in TN? We're looking at our time when we retire. Our source of income will be investments and 401K plus Social Security (if it survives) As I understand it, investments and dividends are taxed. Therefore, are retirees taxed more or less? How about if you're working and saving up for retirement? Is your savings taxed by the state?

TX2TN

[JMT]

Originally Posted by TX2TN

How do the taxes work in TN? We're looking at our time when we retire. Our source of income will be investments and 401K plus Social Security (if it survives) As I understand it, investments and dividends are taxed. Therefore, are retirees taxed more or less? How about if you're working and saving up for retirement? Is your savings taxed by the state?

TX2TN

Tennessee does not tax your savings, but dividends from stocks and bonds are taxed.

From the state's web site:

The individual income tax is imposed only on individuals and other entities receiving interest from bonds and notes and dividends from stock.

Enacted in 1929, this tax was originally called the Hall income tax for the senator who sponsored the legislation. The law can be found in Tennessee Code Annotated in Title 67, Chapter 2.

Exemptions:
The first $1,250 in taxable income received by a single filer is exempt. The first $2,500 in taxable income received by a joint filer is exempt.

Persons over 65 with total income less than $16,200 for a single filer or $27,000 for a joint filer are exempt.

DUE DATE
Annual – April 15

TAX RATE
6% of taxable income

CONTACT PHONE NUMBERS
Individual Income Tax Audit Staff:
(615) 532-6439
Statewide toll-free: (800) 342-1003
Nashville and Out-of-state: (615) 253-0600

WEB SITE
Individual Income Tax