Tennessee Tax on Capital Gains

Tennessee does not tax capital gains at the state level because it does not have a state personal income tax on wages or investment gains.

For most residents, that means no Tennessee tax is due when selling stocks, real estate, or other assets for a profit.

Does Tennessee Have a Capital Gains Tax?

No. Tennessee does not impose a personal state capital gains tax on individuals.

This generally applies to gains from selling:

• Stocks
• Mutual funds
• ETFs
• Land
• Rental property
• Business interests
• Collectibles

Federal capital gains tax rules may still apply.

Short-Term vs Long-Term Capital Gains

Tennessee does not tax either type of gain for individuals:

• Short-term capital gains; assets held one year or less
• Long-term capital gains; assets held more than one year

You may still owe federal taxes depending on your income and the type of asset sold.

Example: You sell stock for a $15,000 profit while living in Tennessee.
Tennessee state tax = $0
Federal tax may still apply.

Capital Gains on Home Sales

Tennessee does not impose state tax on gains from selling a primary residence.

Federal home sale exclusions may still help reduce or eliminate federal tax:

• Up to $250,000 gain may be excluded for single filers
• Up to $500,000 gain may be excluded for married filing jointly

Even if part of the gain is taxable federally, Tennessee does not tax the gain at the state level.

Why Tennessee Is Considered Tax-Friendly

Tennessee is often considered tax-friendly because it has:

• No state income tax on individuals
• No state capital gains tax
• No estate tax
• No inheritance tax

This can be beneficial for retirees and investors.

Electronic Filing Recommendation 💻

• File your federal return electronically for faster processing
• Keep records of cost basis, sale price, and ownership dates
• Review federal capital gains brackets before selling major assets
• Save documents for real estate and investment transactions

Summary

Tennessee does not tax capital gains for individuals. Residents may still owe federal capital gains tax, but there is no Tennessee state tax on profits from selling investments or property.