According to Kiplinger’s annual State-by-State Guide to Taxes, Tennessee is the third-most tax friendly state.
The report estimates the tax burden in each state for a hypothetical married couple with a combined earned income of $150,000, $10,000 in dividend income, two dependents and a $400,000 home (with a mortgage). Based on its findings, the report provided an updated list of the 10 most tax-friendly states in the U.S. for 2019 (starting with the most-friendly state).
State income tax in Tennessee is only on interest and dividends– at 2 percent. The effective income tax rate is ZERO.
Average state and local taxes are higher than other states at 9.47 percent. The state sales tax is 7 percent, with localities adding up to an additional 2.75 percent, according to the Tax Foundation. Groceries are taxed at 5 percent by the state, plus whatever the local rate is.
Tennessee’s average property tax is lower than other states at $768 per $100,000 in home value.
Gas taxes and fees cost drivers 27.4 cents a gallon
And the state still has SIN TAXES:
Cigarettes are 62 cents a pack; other tobacco products are 6.6 percent of the wholesale price.
Taxes on beer are the highest in the country at $1.29 per gallon.
Taxes on wine are $1.27 a gallon, and on liquor $4.46 a gallon.