Updated October 7, 2026. Quick answer: No. Tennessee’s only individual income tax was the Hall tax, which covered interest and dividends, and the Department of Revenue says it was “repealed for tax periods that begin on January 1, 2021”. A gain on a home is neither. The deed carries a recordation tax instead: “Realty transfer tax $0.37 per $100 of purchase price”.
Tennessee tax on home sale profit at a glance
| Item | What the documents say |
|---|---|
| Profit on your main home | No individual income tax to conform: Tennessee taxes none of the gain |
| Rate on gain above the exclusion | No rate: no individual income tax |
| Collected at the sale | Realty transfer tax: $0.37 per $100 of purchase price |
| Source | Tennessee Department of Revenue |
What the Tennessee documents say
The Hall income tax page says the tax applied to “receiving interest from bonds and notes and dividends from stock” and was “repealed for tax periods that begin on January 1, 2021”. The page does not use the words no income tax, so the conclusion rests on the stated scope and repeal of the only individual income tax.
The Department’s recordation tax pages say the realty transfer tax is “Realty transfer tax $0.37 per $100 of purchase price” and, in the overview, that “Deeds pay the realty transfer tax”. The pages read do not list a principal-residence exemption.
What the federal exclusion requires
Most state answers start here. The statute says “Gross income shall not include gain from the sale or exchange” of property that, during the five years before the sale, you owned and used as your principal residence for periods adding up to two years or more. The limit is “shall not exceed $250,000”, or $500,000 for a husband and wife who make a joint return and meet the statute’s conditions. See CMG’s home sale taxes page and exclusion calculator.
A worked example at a $400,000 gain
An illustration, not a return: a married couple in Tennessee sells their main home with a gain of $400,000. On the documents read Tennessee levies no individual income tax, so the state’s income tax on that gain is $0 whether or not the federal exclusion applies. Federal tax is separate and outside this page: if the couple meets the statute’s ownership and use tests, a gain of $400,000 is below the $500,000 joint exclusion, so no federal income tax is owed on it either.
What is collected at the sale
The Department says the realty transfer tax is $0.37 per $100 of the purchase price and is paid by the grantee, the buyer, to the county Register of Deeds. The pages read show no seller withholding and no principal-residence exemption.
What changes in 2026
The documents read for Tennessee announce no change for 2026 that is specific to the tax on a home sale. The forms and instructions read are for tax year 2025 or the newest page archived; check the state agency for 2026 forms when they are published.
What the documents do not say
- The Department’s page describes the repealed Hall tax and does not state in so many words that Tennessee has no income tax. The recordation tax pages are general and do not address a main home.
Common mistakes
- Assuming the absence of a Tennessee income tax removes the federal tax on a home sale; the federal exclusion limits and tests still decide the federal result.
- Treating the buyer-paid recordation tax as a cost that reduces your tax on profit; it is a transfer charge computed on price.
- Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the sale.
Related: home sale taxes, state tax on home sale profit, how Tennessee taxes capital gains, Tennessee retirement taxes, and home sale exclusion calculator.
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Answer againSources
- Hall Income Tax (Overview): https://www.tn.gov/revenue/taxes/hall-income-tax.html
- Recordation Tax: Due Date and Tax Rates: https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html
- Recordation Tax (Overview): https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes.html
- 26 U.S.C. 121, Exclusion of gain from sale of principal residence (U.S. Code, GovInfo): https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partIII-sec121.htm
Sources: the primary documents linked above, read on October 7, 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.