Many people move to Nashville expecting their paycheck to go further, and in one way it does: Tennessee does not tax wages. The state makes up for it at the register. Knowing where the tax shows up helps you set a realistic monthly budget.
Short answer: no state income tax on your salary, but you will pay 9.75% on most purchases in Davidson County, plus a few car-related taxes and fees.
Sales tax: 9.75% in Davidson County
Tennessee’s state sales tax is 7%, one of the highest state rates in the country. Davidson County adds 2.25%. Since February 1, 2025, Nashville also collects a half-cent surcharge that voters approved in November 2024 to fund the Choose How You Move transportation program. Together that is 9.75% on most purchases anywhere in the county.
| Item | How it is taxed |
|---|---|
| Most goods (furniture, electronics, clothing) | Full rate, 9.75% in Davidson County |
| Groceries | Reduced 4% state rate, plus local tax |
| Restaurant and takeout meals | Full rate |
| Prescription drugs | Exempt |
| Rent | Not subject to sales tax |
Furnishing an apartment is where newcomers feel it most. A $2,000 sofa and bed frame comes to about $2,195 after tax.
Your car
Buying a car in Tennessee means paying 7% state sales tax plus local tax at the county clerk. Each year at registration, Davidson County also adds a local wheel tax to the state fee.
Ways to save
- Tennessee usually holds a sales tax holiday on the last weekend of July, when clothing, school supplies and computers under set price limits are tax-free. That is a good time to buy a laptop or work wardrobe.
- Buy big furniture before you move if you are coming from a state with lower sales tax and you are paying to move a truck anyway.
- Compare what you paid in state income tax last year to the extra sales tax you expect to pay here. That is the real difference in your budget.
This post is general information, not tax advice. Rates can change, so check the Tennessee Department of Revenue for the latest.