Tennessee capital gains tax (2026)
South · No state capital gains tax · combined top long-term 23.8%
In Tennessee, capital gains are not taxed at the state level. No state income tax (the former Hall tax on interest and dividends was fully repealed in 2021), so capital gains are not taxed at the state level. You still owe federal capital gains tax: 0/15/20% on long-term gains (top 23.8% with the 3.8% NIIT) and ordinary rates up to 37% on short-term gains. This is general information, not tax advice.
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
How Tennessee taxes capital gains
No state income tax (the former Hall tax on interest and dividends was fully repealed in 2021), so capital gains are not taxed at the state level.
| Component | Rate |
|---|---|
| Federal long-term rate (top) | 20% |
| Net Investment Income Tax (NIIT) | 3.8% |
| Federal subtotal (top long-term) | 23.8% |
| Tennessee effective top long-term rate | 0% (no state tax) |
| Combined top long-term rate | 23.8% |
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
The federal subtotal of 23.8% applies only to top-bracket long-term gains; lower-income filers pay 0% or 15% federally. The Tennessee figure is the effective top long-term rate.
Worked example
On a $100,000 long-term gain for a top-bracket investor in Tennessee, there is no state tax. Federally, 20% ($20,000) plus the 3.8% NIIT ($3,800) on income over the threshold gives about $23,800 - an effective rate near 23.8%. A lower-income filer could pay 15% or even 0% federally.
Estimate only. Use the calculator with your own numbers.
How Tennessee ranks
| Measure | Tennessee | Rank (1 = highest) |
|---|---|---|
| Combined top long-term rate | 23.8% | #49 of 51 |
| State effective top long-term rate | 0% |
States with a similar capital gains burden
| State | State treatment | Combined top long-term rate |
|---|---|---|
| Tennessee (this state) | No state capital gains tax | 23.8% |
| Alaska | No state capital gains tax | 23.8% |
| Florida | No state capital gains tax | 23.8% |
| Nevada | No state capital gains tax | 23.8% |
| New Hampshire | No state capital gains tax | 23.8% |
| Oklahoma | 100% exclusion | 23.8% |
Frequently asked questions
Does Tennessee tax capital gains?
No. Tennessee No state income tax (the former Hall tax on interest and dividends was fully repealed in 2021), so capital gains are not taxed at the state level. Your gains are still subject to federal capital gains tax (0/15/20% for long-term, up to 37% for short-term) plus the 3.8% NIIT for higher earners.
What is the capital gains tax rate in Tennessee in 2026?
Tennessee levies no state capital gains tax, so on long-term gains you face only the federal rate of up to 23.8% (20% plus the 3.8% NIIT). Short-term gains are taxed federally as ordinary income.
How does Tennessee compare with other states on capital gains?
On the illustrative combined top long-term rate, Tennessee ranks #49 of 51 (1 = highest). It is among the lowest-tax states for investors because it has no state capital-gains tax. See the rankings for the full picture.
Are short-term capital gains taxed differently in Tennessee?
Tennessee taxes neither short-term nor long-term gains at the state level. Federally, short-term gains (held a year or less) are taxed as ordinary income at up to 37%, versus the 0/15/20% long-term rates.
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Sources & accuracy
Tennessee treatment from Tax Foundation, 2026 state income tax rates and the state revenue department (find Tennessee's tax authority). Federal figures from the IRS. Data as of June 2026 for the 2026 tax year. Rates change and special rules have conditions - this is general information, not tax advice. Verify with the official source or a tax professional. See our methodology and disclaimer.
Last updated: 2026-06-21