Roth Conversion in Tennessee

A Roth conversion in Tennessee carries a state income tax rate of 0%, because Tennessee imposes no general individual income tax on any form of income as of tax year 2021. For a Tennessee resident, the ordinary income recognized on converting a traditional IRA or 401(k) to a Roth is taxed only at the federal level.

Does a Roth conversion Tennessee residents make get taxed by the state?

No. Tennessee applies a 0% rate to the ordinary income a Roth conversion creates, because the state levies no individual income tax at all for tax periods beginning on or after January 1, 2021 (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). There is no exclusion to claim and no threshold to meet, because there is no state tax base.

A Roth conversion moves money from a pre-tax account, such as a traditional IRA, 401(k), or 403(b), into a Roth account. The converted amount counts as ordinary income in the year of the conversion, after which qualified growth and withdrawals come out tax-free. In an income-tax state, the conversion is taxed at both federal and state levels. In Tennessee, only the federal bill remains.

This distinction is the reason our Roth conversion state tax guide treats Tennessee separately from income-tax states. The mechanics of a conversion do not change by geography, but the state cost does.

Tennessee among the states with no state tax on Roth conversions

Nine states levy no broad individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For a Tennessee resident, a Roth conversion, an IRA withdrawal, a pension payment, and a Social Security check all draw the same 0% state rate (Source: Tennessee Department of Revenue, Hall Income Tax, 2026).

Tennessee’s treatment is straightforward. Some states exempt Social Security yet still tax a conversion. Pennsylvania and Illinois generally exempt qualified retirement-plan distributions after retirement age but still tax other income. Tennessee taxes no individual income of any kind, so there is no age test, income cap, or dollar-limited exclusion, and the 0% rate holds regardless of the amount converted.

Does Tennessee tax 401(k), IRA, and pension withdrawals?

No. Distributions from a 401(k), 403(b), traditional IRA, and every category of pension, whether public, military, or private, are untaxed by Tennessee, at a 0% state rate (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). Because Tennessee imposes no individual income tax, there is no retirement-income exclusion to apply and no age threshold that changes the answer.

Required minimum distributions begin at federal age 73 (age 75 for those born in 1960 or later), and those RMDs face no Tennessee tax either. Deciding how much to convert to Roth in a given year turns entirely on the federal picture for a Tennessee resident, since the state adds nothing to the cost.

Does Tennessee tax Social Security benefits?

No. Tennessee does not tax Social Security benefits, because it has no individual income tax to apply to them (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). Every dollar of a Tennessee resident’s Social Security benefit is free of state tax, with no phase-in and no income-based limit at the state level.

The federal side is separate. Depending on combined income, up to 85% of Social Security benefits can be taxable federally, and Roth conversion income can push more of a benefit into the taxable range for that year. We cover the federal calculation in our note on the taxation of Social Security benefits in 2026.

The Tennessee Hall income tax repeal (2021) and what it means for conversions

Tennessee never taxed wages or salaries. Its only personal income levy was the Hall income tax, enacted in 1929 on interest and dividends. From a 6% rate that applied through 2015, lawmakers cut it one point a year beginning in 2016, and it was fully repealed for tax periods beginning on or after January 1, 2021 (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). No individual income tax return is filed for 2021 forward.

For a conversion, the repeal is the whole story. The Hall tax only ever reached interest and dividends, never a conversion, and today the state’s rate on wages, retirement income, capital gains, interest, and dividends is 0% across the board. A conversion recognized as ordinary income lands in a state with no mechanism to tax it.

Illustrative table: state tax on a $100,000 Roth conversion in Tennessee

The figures below are illustrative and do not reflect any specific person’s situation. They show the state-level cost of converting $100,000 for a Tennessee resident versus residents of hypothetical income-tax states, holding the federal treatment constant. Tennessee’s state cost is $0 (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). Federal tax on the $100,000 applies in every column and is not shown.

State of residence in conversion year	Illustrative state income tax rate	Illustrative state tax on a $100,000 conversion
Tennessee (0% individual income tax)	0%	$0
Hypothetical 5% flat-tax state	5%	$5,000
Hypothetical 7% state	7%	$7,000
Hypothetical 9% state	9%	$9,000

The point is the first row. A $100,000 conversion by a Tennessee resident carries no state tax, while the same conversion in a 5% to 9% state could cost roughly $5,000 to $9,000 in state tax alone. The other rows use illustrative placeholder rates, not any named state’s actual 2026 rate.

At-a-glance: Tennessee versus federal treatment by income source

The table below summarizes how each common retirement income source is treated in Tennessee against the federal treatment for 2026. Tennessee applies a 0% rate across every row, from a Roth conversion to Social Security, because it levies no individual income tax. The federal column shows where ordinary income tax or partial taxation still applies.

Income source	Tennessee state treatment (2026)	Federal treatment (2026)
Roth conversion (ordinary income)	0%, not taxed	Taxed as ordinary income, up to 37%
Traditional IRA / 401(k) withdrawal	0%, not taxed	Taxed as ordinary income
Pension (public, military, private)	0%, not taxed	Generally taxed as ordinary income
Social Security benefits	0%, not taxed	Up to 85% may be taxable
Qualified Roth withdrawal	0%, not taxed	Tax-free if qualified
Interest and dividends	0%, not taxed (Hall tax repealed 2021)	Taxable

Tennessee estate tax 2026 and inheritance tax

Tennessee has no estate tax and no inheritance tax. The Tennessee inheritance tax is no longer imposed after December 31, 2015, so it does not apply to any decedent with a date of death in 2016 or later, and no state return is required (Source: Tennessee Department of Revenue, Inheritance Tax page, 2026). Tennessee also repealed its gift tax effective January 1, 2012, and maintains no separate state estate tax.

Because a Roth conversion can leave heirs a tax-free asset, the absence of a state death tax is relevant to Tennessee residents. The federal estate tax exemption for 2026 is $15 million per individual and applies independently of Tennessee’s rules, as covered in our 2026 estate tax exemption overview.

Is it better to do a Roth conversion after moving to Tennessee?

The state where a conversion is taxed is the taxpayer’s state of legal residence in the conversion year. Under federal law at 4 U.S.C. 114, a state may tax retirement income, including a conversion recognized as ordinary income, only for a legal resident (Source: 4 U.S.C. 114). A conversion completed as a Tennessee resident draws 0% state tax; the same conversion completed while still domiciled in a high-tax state can be taxed by that state.

For someone relocating from an income-tax state, the sequence matters. Converting after Tennessee residency is established produces no state tax at all, since Tennessee has no income tax and no part-year or nonresident return to file. Establishing domicile is a facts-and-circumstances question that typically involves a Tennessee home, driver’s license, voter registration, and the center of one’s financial life. Our guide on moving to a tax-friendly state in retirement walks through the domicile evidence, and any residency decision should be confirmed with a qualified tax adviser.

The federal costs a Roth conversion in Tennessee still triggers

A 0% Tennessee rate does not remove the federal cost stack. Conversion income is federal ordinary income, taxed up to 37%, and it can trigger several federal effects a Tennessee resident still faces, which makes federal timing the entire planning problem.

• IRMAA: Higher modified adjusted gross income from a conversion can raise Medicare Part B and Part D premiums two years later. See our note on the 2026 Medicare IRMAA brackets and premiums.
• Social Security taxability: Conversion income can push more of your Social Security benefit into the federally taxable range for that year.
• Federal bracket-fill: A large one-year conversion can spill into higher federal brackets. Spreading conversions across years to fill a target bracket is a common approach, discussed in our Roth conversion break-even analysis.
• NIIT and capital-gains stacking: Extra income can affect the 3.8% net investment income tax and the rate that applies to stacked long-term capital gains.

Is Tennessee tax friendly for retirees, and what taxes still apply?

Tennessee taxes no retirement income, no wages, and no capital gains at the state level, and it has no estate or inheritance tax (Source: Tennessee Department of Revenue, 2026). The offsetting costs are consumption and property based. Tennessee’s state sales tax is 7%, and its average combined state and local sales tax is 9.61%, among the highest in the country (Source: Tax Foundation, 2026 Sales Tax Rates).

Property tax is comparatively light, with an effective rate of roughly 0.52% on owner-occupied housing (Source: Tax Foundation, 2026, Tennessee effective property tax rate on owner-occupied housing). Tennessee also runs a Property Tax Freeze program, enacted under the 2007 Property Tax Freeze Act, that lets qualifying homeowners age 65 or older freeze the tax on a principal residence at a base amount, subject to a county income limit, alongside a separate Property Tax Relief program (Source: Tennessee Comptroller of the Treasury, 2026). For a retiree who is drawing down accounts and converting, income-side state cost is zero and the burden sits on sales tax at the register.

How Rothology plans a Roth conversion for Tennessee residents

Rothology Premier Roth Conversion is a flat-fee, fiduciary planning service from Q3 Advisors. For a Tennessee resident, the state cost of a conversion is $0, so the work centers on the federal side: projecting multi-year taxable income, sizing each year’s conversion to a target federal bracket, and checking the downstream effects on IRMAA, Social Security taxability, NIIT, and capital-gains stacking.

The engagement is educational and factual. We do not sell insurance or investment products, and the service is a defined-scope consulting plan, not a performance promise. Start with our Roth conversion service overview or schedule a conversation to review your own numbers.

Frequently asked questions

Does Tennessee tax Roth conversions?

No. Tennessee applies a 0% rate to Roth conversion income, because it has no individual income tax for tax periods beginning on or after January 1, 2021 (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). A Tennessee resident owes $0 in state tax on a conversion. Federal ordinary income tax on the converted amount still applies in full.

How much does a Roth conversion cost if I live in Tennessee?

At the state level, $0. Tennessee levies no individual income tax, so a conversion of any size draws no state tax (Source: Tennessee Department of Revenue, 2026). The only tax cost is federal: the converted amount is ordinary income taxed at rates up to 37%, plus any downstream federal effects such as IRMAA or Social Security taxability.

Does Tennessee tax Social Security benefits?

No. Tennessee does not tax Social Security benefits, because it imposes no individual income tax (Source: Tennessee Department of Revenue, Hall Income Tax, 2026). There is no state phase-in or income limit. Federally, up to 85% of benefits can be taxable depending on combined income, and conversion income can affect that figure.

Does Tennessee tax 401(k) and IRA withdrawals?

No. Withdrawals from a 401(k), 403(b), or traditional IRA are not taxed by Tennessee, at a 0% state rate, because the state has no individual income tax (Source: Tennessee Department of Revenue, 2026). There is no age threshold or dollar-limited exclusion. Federal ordinary income tax on pre-tax withdrawals still applies.

Is it better to do a Roth conversion after moving to Tennessee?

A conversion is taxed by your state of legal residence in the conversion year under 4 U.S.C. 114 (Source: 4 U.S.C. 114). Converting after establishing Tennessee residency produces $0 state tax, while converting while domiciled in a high-tax state can expose the conversion to that state’s income tax. Confirm any residency and timing decision with a qualified tax adviser.

What is the 5-year rule on a Roth conversion?

Each Roth conversion starts its own five-year clock. To withdraw converted principal without a 10% penalty, the converted amount generally must stay in the Roth for five years, unless you are age 59 and a half or older or another exception applies. This is a federal rule and is unaffected by Tennessee having no state income tax.

Sources

• Tennessee Department of Revenue, Hall Income Tax (tn.gov/revenue/taxes/hall-income-tax.html): Hall tax repealed for tax periods beginning January 1, 2021; no general individual income tax on wages, retirement income, or capital gains (2026).
• Tennessee Department of Revenue, Inheritance Tax (tn.gov/revenue/taxes/inheritance-tax.html): inheritance tax no longer imposed after December 31, 2015; gift tax repealed effective January 1, 2012 (2026).
• Tennessee Comptroller of the Treasury, Property Tax Freeze program under the 2007 Property Tax Freeze Act, and Property Tax Relief program (2026).
• Tax Foundation, 2026 Sales Tax Rates: Tennessee 7% state rate, 9.61% average combined state and local rate.
• Tax Foundation, 2026 (Tennessee effective property tax rate on owner-occupied housing): Tennessee effective property tax rate approximately 0.52%.
• 4 U.S.C. 114 (federal law): a state may tax retirement income, including IRA distributions, only for a legal resident.
• IRS: Roth conversions are federally taxed as ordinary income; five-year rule; 2026 RMD age 73 (75 for those born in 1960 or later).