Nashville has no local income tax. Tennessee’s constitution bars every city and county in the state from taxing wages or earned personal income, so your paycheck in Davidson County carries no municipal withholding line. What funds the metro government instead is sales tax, property tax, and a handful of narrow fees tied to specific professions or businesses.
Why Nashville Can’t Tax Your Income
The prohibition is written into the state constitution, not left to the city council. In 2014, Tennessee voters amended Article II, Section 28 to permanently forbid the legislature from levying or authorizing “any state or local tax upon payroll or earned personal income.”1Justia. Tennessee Constitution Article II Section 28 That language closes the door for Nashville-Davidson County along with every other local government in the state.
Tennessee also has no state income tax on wages. The only income tax touching your earnings in Nashville is federal.
The Hall Income Tax Is Gone
Older articles about Tennessee taxes often mention the Hall Income Tax, a state tax on interest and dividend income under Tennessee Code ยง 67-2-102. Nashville received a share of what Hall collected from its residents, which is why some people still believe the city has its own income tax.
It doesn’t. The Hall Tax dropped to zero percent for any tax year beginning on or after January 1, 2021.2Justia. Tennessee Code 67-2-102 – Imposition, Rate and Collection of Tax If you collect interest or dividends today, you owe nothing on that income to either Tennessee or Nashville, and the old Form INC 250 is no longer required.
Sales Tax in Davidson County
With no income tax to lean on, Nashville takes a larger share from what you spend. The combined sales tax rate in Davidson County is 9.75% on most purchases: a 7% state rate plus a 2.75% local rate.3Tennessee Department of Revenue. Due Dates and Tax Rates The local portion rose in February 2025 after Davidson County voters approved a 0.5% transit surcharge to fund the city’s transit improvement program.4Tennessee Department of Revenue. Important Notice: Change of Local Tax Rate: Davidson County
Groceries are taxed at a lower rate. Tennessee applies a 4% state rate to food instead of 7%, and the 2.75% local rate still applies, so grocery purchases total 6.75%.3Tennessee Department of Revenue. Due Dates and Tax Rates
Property Taxes
Property tax is Nashville’s other main revenue source, and for most homeowners it’s the single largest tax bill of the year. Davidson County has two rate zones. Properties inside the Urban Services District are taxed at $2.814 per $100 of assessed value; properties in the surrounding General Services District pay $2.782 per $100.5Nashville.gov. Calculate Property Taxes
Assessed value is not market value. Tennessee law sets residential property at 25% of appraised value for tax purposes, and commercial and industrial property at 40%.5Nashville.gov. Calculate Property Taxes A home appraised at $400,000 has an assessed value of $100,000, which produces an Urban Services District bill of about $2,814 before any exemptions.
Statements go out in October, and full payment is due by the last day of February.6Nashville.gov. Office of the Metropolitan Trustee Miss that deadline and interest of 1.5% per month, or 18% annually, is added starting March 1.7Nashville.gov. Property Tax Questions and Answers
The Professional Privilege Tax
Nashville doesn’t tax wages, but Tennessee charges a flat $400 annual fee called the Professional Privilege Tax to people licensed in a short list of professions. Payment is due June 1 each year, and anything paid after that is delinquent.8Justia. Tennessee Code 67-4-1703 – Amount of Tax
Only five categories owe the tax:9Justia. Tennessee Code 67-4-1702 – Occupations Subject to Tax
- Attorneys licensed by the Tennessee Supreme Court
- Securities agents licensed or registered under state securities law
- Broker-dealers
- Investment advisers
- Lobbyists registered with the state
Holding more than one of these licenses still means paying the $400 only once per year.8Justia. Tennessee Code 67-4-1703 – Amount of Tax Doctors, nurses, engineers, and accountants are not on the list, despite a common assumption otherwise. The fee goes to the state, not to Nashville.
If You Run a Business
Self-employment doesn’t trigger a local income tax either, but it does bring you into Tennessee’s business tax. That tax is based on gross receipts, not profits, and applies once a business grosses $100,000 or more. It has two parts: a state business tax and a city business tax, both calculated on sales volume, with rates that vary by business classification.10Tennessee Department of Revenue. Business Tax You’ll also need a Davidson County business license from the county clerk before you open.11Nashville.gov. Apply for Business License