Tennessee vs Georgia Taxes
Compare the total tax burden between Tennessee (no income tax) and Georgia (1% – 5.39%). Enter your income to see which state saves you more.
Georgia vs Tennessee: Atlanta's income tax meets Nashville's zero-tax boom
Georgia and Tennessee share a 37-mile border in the Appalachian foothills, but the tax regimes couldn't be more different. Georgia imposes a 5.49% flat income tax rate (effective 2024, converted from graduated brackets), while Tennessee charges zero state income tax on wages and salaries. Tennessee eliminated its last remaining income tax—the Hall Tax on interest and dividends—in 2021, making it a pure no-income-tax state.
This divergence has fueled Nashville's explosive growth. The Nashville metro has grown by over 20% since 2010, attracting transplants from across the Southeast—including a steady stream from Atlanta. But Georgia has counter-advantages: Atlanta is one of America's most important corporate headquarters cities (home to Coca-Cola, Delta, UPS, Home Depot), and Georgia's overall cost of living remains lower than Nashville's increasingly expensive housing market.
Tennessee compensates for its zero income tax with a 7% state sales tax—one of the highest in the nation—plus local sales taxes pushing combined rates above 9.5% in Nashville. Georgia's 4% base sales tax is considerably lower. Property taxes also differ: Tennessee averages about 0.56% effective rate versus Georgia's 0.83%. The net calculation depends heavily on spending patterns and income level.
Key Differences Beyond Income Tax
| Category | Tennessee | Georgia |
|---|---|---|
| Sales Tax | Base rate 4%, combined rates up to 8.9% in some counties; groceries taxed at reduced local rates only | Base rate 7%, combined rates up to 9.75% in Nashville; groceries taxed at reduced 4% state rate |
| Property Tax | Effective rate ~0.83%; reassessed on county schedules | Effective rate ~0.56%; residential property assessed at 25% of market value |
| Cost of Living | Atlanta metro affordable by major-city standards; suburbs and exurbs very low cost | Nashville increasingly expensive, with median home prices surpassing Atlanta; Knoxville and Memphis much cheaper |
| Retirement Income | Social Security exempt; up to $65,000 per person in retirement income excluded for those 62+ | No state income tax on any income, including all retirement income |
| Business Taxes | Corporate income tax at 5.75%; generous film and job creation tax credits | No corporate income tax, but franchise and excise taxes: 6.5% excise tax on net earnings plus 0.25% franchise tax on net worth |
Who Benefits from Moving?
High-earning professionals ($150K+)
A worker earning $150,000 pays about $8,235 in Georgia income tax. In Tennessee, that drops to $0. Even accounting for Tennessee's higher sales tax (roughly $1,500-$2,000 more annually on typical spending), the net savings exceed $6,000 per year.
Young professionals choosing between Atlanta and Nashville
A single earner making $75,000 saves about $4,100 in income tax by choosing Nashville over Atlanta. But Nashville's higher rents (averaging $200-$400/month more for comparable units) could eat into those savings. Run the full budget comparison before deciding.
Small business owners with pass-through income
A Georgia LLC owner with $200,000 in pass-through income pays roughly $10,980 in state income tax. Tennessee has no income tax on this, but does levy a 6.5% excise tax on net earnings for certain entity types. Sole proprietors and single-member LLCs typically avoid the excise tax, making TN clearly better for them.
Bottom line: At $150,000 income, moving from Atlanta to Nashville saves about $8,235 in state income tax, minus roughly $1,500–$2,000 in higher sales tax and potentially higher housing costs—netting $5,000–$6,000 in annual savings for most households.
Tax at Different Income Levels
| Income | Tennessee Total Tax | Georgia Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $13,687 | $16,733 | +$3,046 |
| $100,000 | $21,099 | $25,493 | +$4,394 |
| $150,000 | $36,542 | $43,631 | +$7,089 |
| $200,000 | $50,885 | $60,669 | +$9,784 |
Based on single filer, standard deduction, 2025 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd pay $4,394/year ($366/month) more in Georgia vs Tennessee.
Tax structure
Tennessee has no state income tax, while Georgia uses progressive brackets up to 5.4%.
Effective rate at your income
At $100,000, Tennessee's effective state rate is 0.0% vs 4.4% in Georgia — a 4.4 percentage point gap.
Tip: No tax on wages or investment income makes Tennessee tax-efficient for both earners and retirees. The high sales tax is the trade-off — factor this into cost-of-living comparisons.
Tip: Georgia's transition to a flat rate simplifies tax planning. The state's generous standard deduction ($12,000 single) reduces the effective rate, especially for lower-income earners. Combined with below-average cost of living, Georgia offers a balanced tax environment.
Understanding Each State
Tennessee
Tennessee has no state income tax on wages. The Hall Tax on investment income was fully phased out in 2021. Tennessee relies on a 7% state sales tax (one of the highest in the US, plus local additions up to 2.75%), which particularly impacts lower-income residents who spend a larger share of income on taxable goods.
Tip: No tax on wages or investment income makes Tennessee tax-efficient for both earners and retirees. The high sales tax is the trade-off — factor this into cost-of-living comparisons.
Georgia
Georgia switched to a flat income tax rate of 5.39% in 2025 (previously progressive brackets up to 5.75%). Georgia's overall cost of living is below the national average, and the state offers a standard deduction of $12,000 for single filers and $18,000 for married filing jointly.
Tip: Georgia's transition to a flat rate simplifies tax planning. The state's generous standard deduction ($12,000 single) reduces the effective rate, especially for lower-income earners. Combined with below-average cost of living, Georgia offers a balanced tax environment.
Key Comparison Points
Income tax structure: Tennessee has no state income tax, while Georgia has a progressive income tax (1% – 5.39%).
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA (2025+), the federal SALT cap is $40,000, phasing out above $500,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in Tennessee or Georgia?
Based on income tax alone, Tennessee has a lower tax burden. At $100K income, you'd save $4,394 annually in Tennessee compared to Georgia. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from Georgia to Tennessee?
A single filer earning $100,000 would save approximately $4,394 per year in total taxes by living in Tennessee instead of Georgia. At $150,000 income, the savings change to $7,089 per year.
What is the income tax rate in Tennessee?
Tennessee has no state income tax.
What is the income tax rate in Georgia?
Georgia has a progressive income tax with rates of 1% – 5.39%.
Does Tennessee have income tax?
No, Tennessee does not levy a state income tax. Residents pay only federal income tax and FICA. However, Tennessee may have higher property taxes or sales taxes to compensate.