The only income tax assessed in Tennessee is the Hall’s Income Tax, which is a 6% tax on earnings from stocks and bonds.
Most folks who are subject to the Hall’s Income Tax have been watching and waiting for the Hall’s Income Tax to be either modified or outright repealed, given recent significant changes to the state’s inheritance tax laws and gift tax laws [inheritance/death taxes phased out/eliminated on 1/1/2016 and gift taxes repealed 7/1/2012]. However, efforts to reduce and/or gradually eliminate the Hall’s Income Tax in prior legislative sessions were not successful. This year, legislation that was introduced on January 14, 2015, and made its way through the House and Senate in April 22, 2015 with only one amendment, was signed by the Governor on May 18, 2015, and became effective for tax years beginning January 2015.
The new law raises the exemption level for the annual Hall Income Tax standard income exemption for citizens age 65 or older from $33,000.00 to $37,000.00 for individual tax payers and from $59,000.00 to $68,000.00 for joint filer taxpayers. The new law also provides for the exemption and income limitation amounts to be adjusted annually for inflation, based upon the percentage change in inflation as measured by the U.S. Bureau of labor statistics. This change in the law will benefit those citizens age 65 and older, who make up approximately half of all the individuals that pay a Hall’s Income Tax.