No, Tennessee does not tax Social Security benefits. The state has no individual income tax on wages, salaries, or retirement income, so your monthly check arrives untouched by state tax. There’s no form to file and no exemption to claim at the state level, because the tax simply doesn’t exist. The federal government is a different story, and it may tax a portion of your benefits depending on your total income.
Other Retirement Income Tennessee Leaves Alone
The same no-income-tax structure covers the rest of your retirement money. Pension payments, 401(k) distributions, traditional and Roth IRA withdrawals, 403(b) distributions, and annuity income are all free from Tennessee tax.1Tennessee Department of Revenue. HIT-18 – Pension Income, Social Security, 401(k), and IRA Distributions Social Security retirement benefits, disability payments (SSDI), and survivor benefits all fall outside the state’s reach as well.
Tennessee also has no inheritance tax for deaths occurring after December 31, 2015, and no separate estate tax.2TN.gov. Inheritance Tax For retirees drawing from several income streams, the state-level savings can be meaningful compared with states that tax pensions or retirement account withdrawals.
What the Federal Government May Still Tax
Tennessee won’t touch your Social Security, but the IRS might. The federal calculation adds your adjusted gross income, any tax-exempt interest (including municipal bond income), and half of your Social Security benefits, then compares that total against a base amount for your filing status.3Internal Revenue Service. Publication 915 – Social Security and Equivalent Railroad Retirement Benefits
The thresholds work like this:
- Single, head of household, or qualifying surviving spouse: between $25,000 and $34,000, up to 50% of benefits may be taxable; above $34,000, up to 85% may be taxable.4Internal Revenue Service. Social Security Income
- Married filing jointly: between $32,000 and $44,000, up to 50% may be taxable; above $44,000, up to 85% may be taxable.4Internal Revenue Service. Social Security Income
- Married filing separately: if you lived with your spouse at any point during the year, the base amount drops to $0, meaning up to 85% of your benefits could be taxable regardless of income. If you lived apart for the entire year, the base amount is $25,000.4Internal Revenue Service. Social Security Income
The tax-exempt interest piece catches people off guard. Municipal bond income and tax-exempt money market fund income don’t appear on your regular return but still count in this formula, so shifting into tax-exempt investments won’t lower the taxable share of your Social Security.
Setting Up Federal Withholding
If your combined income puts you above the federal thresholds, consider having tax withheld directly from your Social Security payments. The Social Security Administration offers four flat withholding rates: 7%, 10%, 12%, or 22% of your monthly benefit. You can set it up through your my Social Security account online or by calling the SSA at 1-800-772-1213, and you can start, stop, or change the percentage at any time.5Social Security Administration. Request to Withhold Taxes
Without withholding or estimated payments, you may owe a lump sum at filing time and face an underpayment penalty. The IRS generally charges that penalty if you owe more than $1,000. You can avoid it by paying at least 90% of the current year’s tax or 100% of the prior year’s tax (110% if your AGI exceeded $150,000 the prior year).6Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Some leniency exists for people who recently retired after age 62 or became disabled, but setting up withholding from the start is the simplest way to stay ahead of it.
Taxes Tennessee Does Charge
Tennessee makes up for the missing income tax largely through sales tax. The state rate on most goods and taxable services is 7%, and local governments add up to 2.75% on top.7TN.gov. Due Dates and Tax Rates The combined average across the state is roughly 9.61%, among the highest in the country.8Tax Foundation. State and Local Sales Tax Rates, 2026
Groceries get a lower rate but aren’t exempt. Tennessee charges 4% state sales tax on food and food ingredients, plus the local rate.7TN.gov. Due Dates and Tax Rates On a fixed income, that grocery tax is worth building into a monthly budget.
Property taxes are collected by counties and cities, and rates vary widely across the state.
Property Tax Relief for Seniors
Tennessee runs several programs that reduce property taxes for homeowners 65 and older. The state-reimbursed property tax relief program covers taxes on the first $32,700 of a home’s full market value for tax year 2026. To qualify, you must be at least 65 and meet income limits set each year in the state’s General Appropriations Act.9MTAS – University of Tennessee. Property Tax Relief for the Elderly and Disabled
Many counties and cities also offer a property tax freeze. If you qualify, your bill is locked at the amount you owed the year you enrolled. Even if rates rise or your county reappraises, the amount stays the same as long as you keep meeting the rules. You must be 65 or older, own and live in the home as your primary residence in a participating jurisdiction, and have total income below your county’s limit. A 2023 law created a local option letting participating jurisdictions set the ceiling at $60,000, adjusted annually for Social Security cost-of-living increases.10Comptroller of the Treasury – TN.gov. Property Tax Freeze
Both programs require an application each year with your local trustee or tax official. Improvements that increase a home’s value can reset the base amount under the freeze program, so weigh that before major renovations.