Ask Andy: Tennessee individual income "Hall Tax" - Action News 5 - Memphis, Tennessee

Ask Andy: Tennessee individual income "Hall Tax"

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MEMPHIS, TN -

(WMC TV) - One of the things that sold me into moving to Memphis 16 years ago was Tennessee has no state income tax.

That's partially true.

To be sure, the state does not tax salary or wage income.

But Tennessee most certainly does have an income tax. It's been on the books for 84 years.

It's called the Tennessee Individual Income Tax -- or "Hall Tax" -- enacted in 1929. It's a six percent tax on income from stocks and bonds. 

Attorney and CPA Laurinda T. Ingram, director of estate and gift tax services for the Memphis accounting firm Reynolds Bone & Griesbeck, said it's essentially a tax on dividends and capital gains distribution.

"You'd pay this tax on corporate bonds, if you had any income from corporate bonds," she said. "You'd pay it on income from mutual funds, from things that are not through a regular bank."

According to the Tennessee Department of Revenue, interest from banks and credit unions, savings accounts, CD's, U.S. Treasury bonds and Tennessee municipal bonds is exempt from the tax. 

Also, individuals over 65 who make less than $26,200 a year and married seniors who make less than $37,000 a year are exempt.

This link from the revenue department describes the tax in more detail. This link explains what is taxed and what is exempt.

Copyright 2013 WMC-TV. All rights reserved.

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