If signed, the Hall Tax phaseout would become the largest tax cut in state history, returning more than $300 million a year to taxpayers.
Tennessee on the Road to Becoming Income Tax-Free
Many people already think Tennessee is one of only a handful of states with no income tax, but as middle-class retirees can attest, it is anything but.
While the state does not tax income from labor, it has levied a 6 percent tax on investment income since the establishment of the Hall Income Tax in 1929. Because retirees live on fixed incomes and disproportionately rely on their savings to make ends meet, this is effectively a nest egg tax. It also drives investors and job creators to states like Florida and Texas, which impose no income tax of any kind.
Sadly, many people are unaware of this harmful tax. It isn’t until they start withdrawing their savings to pay for retirement that they are caught by surprise. In fact, our own polling showed that only 17 percent of Tennesseans even knew the tax existed. It’s bad enough when government raids your nest egg; it’s even worse when it does it in the dark of night.
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The Heritage Foundation is the nation’s most broadly supported public policy research institute, with more than 453,000 individual, foundation and corporate donors. Heritage, founded in February 1973, mission is
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