Selling a business in Tennessee: what the state takes (2026)
Tennessee has no broad individual income tax. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- None
- Top Tennessee income tax rate (2026)
- $0
- State tax on a $25M long-term gain
- 23.8%
- Combined federal and state rate on $25M
- 43 of 51
- Rank by total tax on $25M (1 = highest)
How Tennessee taxes a business sale
- Income tax
- No broad-based individual income tax.
- Long-term capital gains
- Tennessee has no personal income tax, so an individual's gain on selling stock owes no state tax.
- Entity-level taxes
- Corporations, LLCs, limited partnerships and business trusts, including S corps, pay the franchise tax (on net worth) and the excise tax (on net earnings) at the entity level. An asset sale by the entity can therefore be taxed in Tennessee even though the owner's stock sale is not.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Tennessee tax | $0 | $0 | $0 |
| Total tax | $2,380,000 | $5,950,000 | $11,900,000 |
| Effective combined rate | 23.80% | 23.80% | 23.80% |
| Net proceeds after tax | $7,620,000 | $19,050,000 | $38,100,000 |
| Extra tax versus Texas | $0 | $0 | $0 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Tennessee tax
- $0
- Total tax
- $5,950,000
- Effective rate on the gain
- 23.80%
- Net proceeds after tax
- $19,050,000
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Alabama27.6% combined, $18.10M net
- Arkansas24.5% combined, $18.86M net
- Georgia28.8% combined, $17.80M net
- Kentucky27.3% combined, $18.18M net
- Mississippi27.8% combined, $18.05M net
- Missouri23.8% combined, $19.05M net
- North Carolina27.8% combined, $18.05M net
- Virginia29.5% combined, $17.61M net
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
Methodology and sources
Tennessee figures are for tax year 2026. No personal income tax; the Hall tax on interest and dividends was repealed for tax periods beginning on or after January 1, 2021. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Tennessee Department of Revenue, Hall Income Tax (repealed for periods beginning Jan 1, 2021)
- 2Tennessee Department of Revenue, Franchise & Excise Tax
- 3Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
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Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Tennessee,” 2026, https://laurent.capital/research/seller-tax-map/tennesseeLink (HTML)
<a href="https://laurent.capital/research/seller-tax-map/tennessee">The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Tennessee</a> (Laurent Capital)Planning a sale and weighing the tax cost?
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