Updated October 16, 2026. Quick answer: Tennessee does not tax 403(b) or 457(b) withdrawals: the Department of Revenue says “Tennessee has no individual income tax on wages, employer sponsored retirement income” or most other income.
Tennessee at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | No state income tax on them |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | Not needed; there is no individual income tax |
| Public-employee pension rule | Not applicable |
| Rate in the documents read | No individual income tax |
| Changed for 2026? | The Hall tax on interest and dividends was repealed for periods beginning January 1, 2021 |
What the Tennessee documents say
Tennessee’s HIT-18 help article says “This also includes distributions from accounts like IRAs and 401(k) plans” and that distributions from annuities are not subject to Tennessee tax. It does not name 403(b) or 457(b) plans; the answer follows from the absence of an individual income tax.
A second Department page confirms that the Hall tax was “repealed for tax periods that begin on January 1, 2021”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The Department’s documents do not name 403(b) or 457(b) plans.
- The HIT-18 article is dated 2021.
Common mistakes
- Assuming Tennessee’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Tennessee taxes 401(k) and IRA withdrawals, Tennessee retirement taxes, whether Tennessee taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- HIT-18: Pension Income, Social Security, 401(k), and IRA Distributions: https://revenue.support.tn.gov/hc/en-us/articles/360057371832-HIT-18-Pension-Income-Social-Security-401-k-and-IRA-Distributions
- Hall Income Tax: https://www.tn.gov/revenue/taxes/hall-income-tax.html
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.