Updated October 4, 2026. Quick answer: No. Tennessee does not tax 401(k) or IRA withdrawals. The Tennessee Department of Revenue states: “Tennessee has no individual income tax on wages, employer sponsored retirement income”. Federal tax on the withdrawal still applies.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Tennessee tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Tennessee tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Tennessee tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Tennessee tax TSP withdrawals?.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Tennessee have an inheritance tax?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Tennessee tax HSA contributions?.
What Tennessee does with 401(k) and IRA withdrawals
The Department’s help article on pension income adds: “This also includes distributions from accounts like IRAs and 401(k) plans”
Its Hall income tax page explains the old tax: it applied only to interest from bonds and notes and dividends from stock, and “The Hall Income tax was repealed for tax periods that begin” January 1, 2021, or later.
| Item | What the documents say |
|---|---|
| Treatment | Not taxed by the state |
| State rate on a withdrawal | None |
| Source | Tennessee Department of Revenue |
A $40,000 withdrawal
A $40,000 withdrawal from a traditional 401(k) or IRA adds $0 of Tennessee income tax, because the state has no tax on that income. Your federal return still includes the withdrawal.
What changes in 2026
No change for 2026 appears in the documents read for this page.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Tennessee taxes pensions, how Tennessee taxes retirement income, whether Tennessee taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Hall Income Tax: https://www.tn.gov/revenue/taxes/hall-income-tax.html
- 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
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.