Income Reality in Tennessee — Taxes, Housing & Salary
No income tax, Nashville boom, below-average costs
Data: 2026-Q2 · BLS · HUD · KFFIncome tax overview
Tennessee has no state income tax on wages. The Hall Tax on investment income was eliminated in 2021.
No State Income Tax — this is a significant advantage. At a $70,000 salary, you keep approximately $6,510 more per year than in a high-tax state like California.
Housing snapshot
Median 1BR rent in Nashville is approximately $1,700-$1,900. Memphis is significantly more affordable at $1,000-$1,100. Knoxville and Chattanooga are $1,100-$1,300.
1BR FMR across major Tennessee cities: $1,578 – $1,578/mo (HUD FY2026)
Cost of living summary
At an index of 90, Tennessee is about 10% cheaper than the national average of 100.
Tennessee combines no state income tax with below-average costs. Nashville has emerged as a major music, healthcare, and tech hub with significant population growth.
Major cities
Purchasing power context
Tennessee's no income tax saves approximately $3,000-$5,000/year on a $70,000-$100,000 salary. Nashville's rising housing costs partially offset this advantage.
Purchasing Power Reality
What your salary feels like in other cities
Salary reality examples
Comfortable in Nashville despite rising costs. Very comfortable in Memphis, Knoxville, and Chattanooga.
Strong purchasing power statewide. No income tax is a meaningful advantage.
Excellent flexibility. Tennessee attracts many relocators for this exact combination.
FAQ — Income Reality in Tennessee
Does Tennessee have a state income tax?
No. Tennessee has no income tax on wages. The Hall Tax on investment income was eliminated in 2021.
Is Nashville affordable?
Nashville has become significantly more expensive since 2018. 1BR rent averages $1,700-$1,900. It remains cheaper than comparable coastal cities but is no longer the bargain it once was.
Cities in Tennessee
Related tools
Cost of Living Index from C2ER. This is a picture, not a verdict.