Tennessee’s Hall Income Tax is the state tax on interest and dividend income from investments which was enacted in 1929 to raise money for state and local governments in TN. On April 22, 2016 Tennessee lawmakers voted to phase out the TN Hall tax over a 6 year period, beginning with the upcoming fiscal year in which the tax will be reduced from 6 to 5 percent. The phasing out of the TN Hall Tax will ultimately eliminate it by tax year 2022. The Tennessee government hopes removal of the Hall Tax on stocks and bonds will entice more people and companies to move to the state, which already does not tax income, with its “tax-free state status”.
This tax repeal by the state of Tennessee is expected to impact about 200,000 households, which are currently paying the TN Hall Tax. The Hall Tax is levied on individuals and other entities receiving interest from bonds and notes and dividends from stock, and does not impact interest earned on CD’s, savings accounts, government bonds, and other sources which are exempt.