Tennessee Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Living in Tennessee, Working Remotely

Since Tennessee has no state income tax, Tennessee residents working remotely face unique advantages but must understand other states’ rules.

Tennessee Residents Working for Out-of-State Employers

Tennessee Tax Owed: Tennessee residents working remotely for out-of-state employers owe $0 Tennessee income tax because Tennessee has no income tax.

Other State Tax Considerations: Some states may attempt to tax income earned by remote workers. The key question is whether the other state (where your employer is located) claims the right to tax your income.

“Convenience of the Employer” Rule – States to Watch: Several states apply a “convenience of the employer” rule that may tax remote workers even when physically working from Tennessee:

States with Convenience Rule:

1. New York: Most aggressive – may tax Tennessee residents working remotely for NY employers
2. Arkansas: Applies convenience rule
3. Connecticut: Has applied convenience rule in some cases
4. Delaware: Has convenience rule provisions
5. Massachusetts: Previously applied convenience rule (enforcement varies)
6. Nebraska: Has convenience rule provisions
7. Pennsylvania: Applies convenience rule

Example – Tennessee Resident, New York Employer:

• Tennessee resident works from home in Tennessee for New York employer
• Performs all work physically in Tennessee
• Tennessee income tax: $0 (no income tax)
• New York may attempt to tax income under convenience rule
• Taxpayer may need to file New York non-resident return and dispute New York’s taxation
• Consider consulting tax professional for multi-state situations

Source: Various state tax authorities
Source: https://www.tn.gov/revenue.html

Protection for Tennessee Residents

Constitutional Protection: Tennessee’s constitutional prohibition on income tax means Tennessee will never tax its residents’ income, regardless of where they work or where their employer is located.

Advantage: Tennessee residents avoid double taxation by Tennessee (Tennessee levies no tax), but must address any claims by other states.

Working in Tennessee, Living in Another State

Non-residents who physically work in Tennessee face no Tennessee income tax because Tennessee has no income tax on earned income.

Key Point: Your home state may tax you on income earned in Tennessee. Tennessee will not provide a credit because Tennessee levies no tax.

Example: Georgia resident works remotely from Tennessee (physically performs work in Tennessee):

• Tennessee income tax: $0 (Tennessee has no income tax)
• Georgia income tax: Georgia will likely tax this income as it was earned by a Georgia resident
• No Tennessee tax credit available (Tennessee levied no tax)

Source: https://www.tn.gov/revenue.html

Tennessee Has No “Convenience of the Employer” Rule

Tennessee Does Not Tax Non-Residents: Tennessee does not apply a “convenience of the employer” rule because Tennessee has no income tax to apply.

Non-residents working remotely from their home state for Tennessee employers owe $0 Tennessee income tax.

Source: Tennessee Constitution Article II, Section 28

Interstate Tax Risk Indicator

Working with These States from Tennessee Requires Careful Planning:

Remote workers involving Tennessee and the following states should understand potential tax issues:

• New York: Applies convenience of employer rule – may tax Tennessee residents working for NY employers
• Arkansas: Applies convenience rule – may tax Tennessee residents working for AR employers
• California: Does not apply convenience rule but has aggressive residency audits
• Pennsylvania: Applies convenience rule – may tax Tennessee residents working for PA employers
• Connecticut: May apply convenience rule in some circumstances
• Massachusetts: Convenience rule enforcement varies

Tennessee Advantage: Tennessee residents face no Tennessee income tax regardless of these other states’ rules. The issue is solely whether the other state can tax the Tennessee resident.

Source: Multi-state tax authority publications

Reciprocal Agreements

Tennessee Has No Reciprocity Agreements: Tennessee does not have reciprocal tax agreements with other states because Tennessee has no income tax to be part of a reciprocity agreement.

What This Means:

• Tennessee residents working in other states may owe income tax to those states
• Non-residents working in Tennessee owe no Tennessee income tax (Tennessee has no income tax)
• No reciprocity certificates or forms are needed for Tennessee

Source: https://www.tn.gov/revenue.html

Multi-State Tax Filing for Tennessee Residents

Tennessee Return: Tennessee residents never file a Tennessee income tax return because Tennessee has no income tax.

Other State Returns: Tennessee residents may need to file income tax returns in other states if:

• They physically worked in another state that has income tax
• They received income sourced to another state
• The other state applies a “convenience of employer” rule

No Credit on Tennessee Return: Since Tennessee has no income tax, there is no Tennessee tax return on which to claim a credit for taxes paid to other states.

Source: https://www.tn.gov/revenue.html