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Does Tennessee Tax Capital Gains? No, Hall Tax Repealed in 2021

Updated October 4, 2026. Quick answer: No. Tennessee’s Hall income tax applied only to dividends and interest, and the Department of Revenue says it “was repealed for tax periods that begin on January 1, 2021”. A sale of stocks, funds or real estate adds no Tennessee income tax.

Selling your home? How the state taxes the profit, from its own tax documents: Does Tennessee tax the profit from selling your home?.

The same question for dividends and interest: does Tennessee tax dividends and interest.

How Tennessee treats capital gains

ItemWhat the documents say
TreatmentNot taxed by the state
Hall income taxRepealed for tax periods beginning on or after January 1, 2021
Mutual fund sharesBefore the repeal the Department wrote that “the gain is not taxable for Tennessee income tax” when shares of a fund are sold

A $50,000 long-term gain

A $50,000 long-term gain adds $0 of Tennessee income tax. Federal tax on the gain still applies.

What changes in 2026

The Hall tax repeal took effect for tax periods beginning on January 1, 2021, so no 2026 change is pending.

Federal rules

The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.

Related: whether Tennessee taxes pensions, how Tennessee taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.

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Sources

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.

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