Updated October 16, 2026. Quick answer: The Tennessee documents read do not mention inherited IRAs. The Hall income tax, which the Department describes as imposed on interest and dividends and whose manual also lists distributions of income or earnings from federally recognized retirement accounts, including IRAs, as taxable, “has been repealed” for 2021 and later, and the inheritance tax is no longer imposed after December 31, 2015.
Tennessee at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | The Hall tax, which did not apply to salaries, wages and commissions but did list income or earnings distributed from retirement accounts, including IRAs, was repealed for tax years beginning on or after January 1, 2021 |
| Do the state’s documents address beneficiaries? | Not addressed: the documents read do not mention inherited accounts |
| Retirement exclusion or credit | Not applicable; the Hall income tax, which listed interest, dividends, capital gains and income or earnings distributed from retirement accounts as taxable, is repealed |
| Rate in the documents read | Not applicable (the Hall tax was repealed beginning January 1, 2021) |
| State inheritance or estate tax | No inheritance tax after December 31, 2015 |
| Changed for 2026? | The documents read describe the Hall tax repeal beginning January 1, 2021 and the end of the inheritance tax after December 31, 2015; they do not discuss 2026 |
What the Tennessee documents say
The Department of Revenue says the Hall income tax applied to people “receiving interest from bonds and notes and dividends from stock”, and the Hall Income Tax: Due Date and Tax Rates page says it was repealed beginning January 1, 2021.
The Department’s Hall Income Tax Manual (August 2022) says the Hall tax, unlike most income taxes, “does not apply to salaries, wages, and commissions”.
The Department’s Inheritance Tax page says “The inheritance tax is no longer imposed after December 31, 2015”.
Federal income tax on the withdrawal is separate and is covered in the 10-year rule section below.
The federal 10-year rule and your Tennessee tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Tennessee’s own death taxes, see Tennessee inheritance tax.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- The Hall Income Tax Manual lists distributions of income or earnings from federally recognized retirement accounts, including IRAs, as income the repealed Hall tax taxed; it does not address inherited accounts.
Common mistakes
- Assuming Tennessee’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Tennessee preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Tennessee taxes 401(k) and IRA withdrawals, Tennessee retirement taxes, Tennessee inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- Hall Income Tax: https://www.tn.gov/revenue/taxes/hall-income-tax.html
- Hall Income Tax: Due Date and Tax Rates: https://www.tn.gov/revenue/taxes/hall-income-tax/due-date-and-tax-rates.html
- Inheritance Tax: https://www.tn.gov/revenue/taxes/inheritance-tax.html
- Hall Income Tax Manual (August 2022): https://www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/august-2022/Hall-Income-Tax.pdf
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
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.