Tennessee Estate
Tax Calculator

Tennessee does not impose a state estate tax or inheritance tax. The state repealed its estate tax (previously called the inheritance tax) effective January 1, 2016, following a phase-out that increased the exemption over several years.

Tennessee also fully repealed its Hall income tax on interest and dividends effective 2021.

The elimination of both the estate tax and the Hall tax has significantly improved Tennessee's competitive position for attracting and retaining high-net-worth residents, particularly from neighboring states and the broader Southeast.

Only the federal estate tax applies to Tennessee estates. The $15 million exemption with portability and 40% top rate governs.

No state estate tax filing is required.

Tennessee's lack of state income tax and state estate tax makes it one of the most tax-favorable states in the Southeast. Nashville's growing wealth management sector and Memphis's logistics industry are producing more estates with potential federal exposure.

Tennessee is a common-law property state with an elective share providing the surviving spouse the greater of one-third of the net estate or the child's share. Tennessee's homestead exemption ($5,000 for an individual, $7,500 for a family) is modest but protects the homestead from creditor claims.

Tennessee's music industry, healthcare sector, and agricultural operations (including tobacco, livestock, and row crops) present diverse estate assets. Closely held business valuation is a common issue, particularly for healthcare practices and music publishing catalogs, which require industry-specific expertise.

Evaluate whether FLP or LLC structures provide appropriate valuation discounts for federal estate tax purposes.

Evaluate federal estate tax exposure for Tennessee estates. Use this calculator to model business valuations and portability strategies.

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Because Tennessee does not impose a state estate tax, the federal estate tax is the only transfer tax layer. The current federal exemption of $15 million per individual (2025) shelters the vast majority of estates.

However, estates that exceed this threshold face a top marginal rate of 40%, making federal planning essential for high-net-worth Tennessee residents.

The Tax Cuts and Jobs Act (TCJA) doubled the federal exemption effective 2018, but this increase is scheduled to sunset after 2025. If Congress does not act, the exemption will revert to approximately $7 million (adjusted for inflation).

For Tennessee residents with estates between $7 million and $15 million, this sunset creates a planning window: transfers made now under the higher exemption will not be clawed back, even if the exemption later decreases.

The absence of a state estate tax in Tennessee simplifies the analysis — there is no gap between state and federal exemptions to navigate, no separate state return to file, and no risk of double taxation. However, this also means there is no state-level deduction to offset federal liability.

Federal planning tools — marital deductions, charitable deductions, and the unified credit — carry the full weight of estate tax mitigation. Use the Tennessee estate tax calculator to model current and post-sunset scenarios, and review the Tennessee probate cost calculator to understand full settlement costs.

Federal portability allows a surviving spouse to inherit the deceased spouse's unused estate tax exclusion (DSUE), effectively doubling the available federal exemption to $30 million for married couples. Electing portability requires filing Form 706 for the first-to-die spouse, even if no federal estate tax is owed — a step that is frequently overlooked when no tax appears to be due.

Because Tennessee does not impose a state estate tax, there is no state-level portability concern. The federal election is the only one that matters, and it applies automatically to the surviving spouse's estate once made.

This is simpler than in estate-tax states, where the lack of state portability forces the use of bypass trusts to preserve both exemptions.

Despite this simplicity, portability has limitations. The DSUE amount is not indexed for inflation — it locks in at the value of the first spouse's unused exemption at the date of death.

If the surviving spouse remarries and the new spouse dies, the DSUE from the first spouse is lost. For Tennessee families with significant wealth, bypass trusts may still be preferable to portability because they provide asset protection, generation-skipping benefits, and inflation-adjusted growth outside the surviving spouse's taxable estate.

Use the executor fee calculator and probate cost calculator to understand the full administration picture when comparing trust structures.

Without a state estate tax, Tennessee residents focus planning efforts on the federal layer. The current $15 million exemption provides substantial shelter, but the scheduled TCJA sunset makes it prudent to accelerate planning.

Irrevocable trusts — including ILITs, SLATs, and QPRTs — remove assets from the taxable estate permanently. Once transferred, these assets and their future appreciation are outside the federal estate, regardless of future exemption changes.

Annual exclusion gifts of $19,000 per recipient (2025) remain the simplest estate reduction tool. Married couples can jointly gift $38,000 per recipient through gift-splitting.

Over a decade, a family gifting to four beneficiaries annually removes $1.44 million from the estate with no gift tax return required. Charitable deductions — whether through outright bequests, donor-advised funds, or charitable trusts — further reduce the taxable estate while supporting philanthropic goals.

GRATs and GRUTs (grantor retained unitrusts) transfer appreciation to beneficiaries at minimal transfer tax cost. For Tennessee residents holding concentrated stock positions or rapidly appreciating assets, these vehicles are particularly efficient.

Family limited partnerships and LLCs may provide valuation discounts for gift and estate tax purposes, though the IRS scrutinizes these structures closely. Professional valuation and proper documentation are essential.

Model your federal exposure with the Tennessee estate tax calculator, or find an estate planning attorney in Tennessee for personalized guidance.