Does Tennessee Have an Inheritance or Estate Tax?

No, not for deaths in 2016 or later. The Tennessee Department of Revenue states that the inheritance tax is not imposed after December 31, 2015, and asks people not to file inheritance tax returns for anyone who died in 2016 or after.

Tennessee didn't drop the tax overnight. The legislature phased it out by raising the exemption each year before repealing it:

So if someone passed away in 2016 or later, there is no Tennessee inheritance tax to worry about, regardless of the size of the estate.

No. Tennessee does not have a separate state estate tax in effect today.

You may see older references to a Tennessee "estate tax" in state law. That tax was a "pick-up" tax tied to a federal credit for state death taxes. Congress eliminated that federal credit years ago, so the Tennessee pick-up tax no longer produces any tax. In practical terms, there is no Tennessee estate tax.

People use these terms interchangeably, but they're technically different.

• An estate tax is charged on the total value of what someone leaves behind, and it's paid by the estate before property is passed on. The federal government has an estate tax.
• An inheritance tax is usually charged to the person receiving the property, and the rate often depends on how closely related they were to the person who died.

Tennessee's old inheritance tax actually worked a lot like an estate tax, because it was paid out of the estate. Either way, it's gone now.

No. Tennessee's gift tax was repealed effective January 1, 2012, according to the Tennessee Department of Revenue.

Tennessee does not have a personal income tax on wages, and the Hall income tax on interest and dividends was fully repealed for tax years beginning January 1, 2021. Tennessee does not tax an individual's capital gain from selling an inherited house.

Federal income tax is a different story, which we cover below.

Yes, but it only affects very large estates. For people who die in 2026, the federal basic exclusion amount is $15,000,000 per person, according to the IRS. Estates below that amount generally owe no federal estate tax. The amount is set to be adjusted for inflation in future years.

Married couples can often combine their exclusions through what's called portability, which lets a surviving spouse use the deceased spouse's unused amount. Claiming it generally requires the executor to file a federal estate tax return (IRS Form 706), even if no tax is due. That's a question for the estate's CPA or attorney.

For most Middle Tennessee families, the federal estate tax never comes into play. But if the estate is large, the executor should talk to a tax professional early.

Generally, no. Under federal rules, receiving an inheritance is not usually treated as taxable income to the heir.

There are a few important exceptions and follow-on events:

• Inherited retirement accounts. Withdrawals from an inherited traditional IRA or 401(k) are generally taxable income when you take them out.
• Income after the date of death. Rent, interest, or dividends earned after the person died may be taxable to the estate or the heirs.
• Selling inherited property. If you sell an inherited house for more than its tax basis, you may have a capital gain.

This is where most families' tax questions really land. Inherited property generally gets a "stepped-up basis," meaning the starting value for tax purposes is usually the fair market value on the date of death, not what the original owner paid.

If you sell fairly soon after inheriting, for close to the date-of-death value, the taxable gain is often small. If the house rises in value before you sell, the increase may be taxable.

We cover this in detail, with examples, in Taxes on Inherited Property in Tennessee. The short version: keep a record of the home's value at the date of death (an appraisal is often the clearest support) and keep receipts for improvements and selling costs.

Then the Tennessee inheritance tax may have applied, depending on the year and the size of the estate. Most of those estates would already have been handled long ago. If you're only now dealing with a house from an older estate, the title company or an attorney may ask whether any old Tennessee inheritance tax was handled for that estate before the property can be sold. It's a paperwork question, not usually a big hurdle, but it's worth raising early.

State death taxes are generally based on where the person lived and where their property is located. A handful of states still have an inheritance tax (as of 2026, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania), and a number of states have their own estate tax.

If your parent lived in one of those states, their estate may face that state's rules, even if you live in Tennessee. If the person lived in Tennessee and the house is in Tennessee, Tennessee's no-tax rules generally apply. When more than one state is involved, ask a CPA or estate attorney.

Yes, a few ordinary ones, but they aren't inheritance or estate taxes.

• Property taxes. County (and sometimes city) property taxes keep accruing. At closing, the current year's taxes are prorated between seller and buyer.
• Tennessee transfer tax. Tennessee charges a realty transfer tax of 37 cents per $100, generally based on the greater of the price paid or the property value, when a deed is recorded. State guidance places this tax on the buyer, though the contract and closing statement show how costs are split.
• Closing costs. Title fees, recording fees, and any agent commissions if you list.

When you sell to Smith Home Buyer, there are no commissions and we cover normal closing costs.

Taxes are usually only one piece of the puzzle. You may also be sorting out probate, other heirs, and what to do with the house itself. These guides can help:

• How to sell an inherited house in Tennessee
• Do you have to go through probate to sell an inherited house in Tennessee?
• Documents you need to sell an inherited house in Tennessee

If you'd like to see what a simple, as-is sale could look like, get your free cash offer. No obligation, no repairs, and you choose the closing date. Smith Home Buyer buys houses across Davidson, Williamson, Rutherford, Wilson, Cannon, and Coffee counties.