Updated 17 April 2026
Texas vs Tennessee
Two southern states with no income tax, both with major metros and strong healthcare. Texas has the higher property tax; Tennessee has the higher sales tax. Which one wins for your situation?
General information only. Not tax advice.
Texas wins for
- No corporate income tax at all
- Lower combined sales tax (8.2% vs 9.55%)
- No grocery tax on most items
- School district tax freeze after age 65
- Larger job market (Houston, Dallas, Austin)
- World's largest medical complex (Houston)
Tennessee wins for
- Much lower property tax (0.64% vs 1.68%)
- Slightly lower cost of living overall
- Lower home insurance premiums
- Milder climate (four seasons, less extreme heat)
- Closer to East Coast family and airports
- Nashville is top-tier livability city
Side-by-Side Comparison
| Category | Texas | Tennessee | Winner |
|---|---|---|---|
| State Income Tax | None | None | Tie |
| Property Tax Rate | 1.68% avg effective | 0.64% avg effective | Tennessee |
| Property Tax (over 65) | School district freeze + $100K exemption | EAV freeze for lower incomes | Texas (over 65) |
| State Sales Tax | 6.25% | 7.0% | Texas |
| Combined Sales Tax | 8.2% avg statewide | 9.55% avg statewide | Texas |
| Grocery Tax | Groceries exempt (most items) | 4% state rate on groceries | Texas |
| Corporate Income Tax | None | 6.5% on C-corps | Texas |
| Business Tax | 0.375-0.75% franchise (margin) tax | Limited franchise tax | Tennessee (for small biz) |
| Estate Tax | None | None | Tie |
| Cost of Living Index | 93 (7% below avg) | 91 (9% below avg) | Tennessee |
| Median Home Price | $310,000 | $300,000 | Tennessee |
| Climate | Hot summers, mild winters | Mild four seasons | Tennessee (milder) |
| Healthcare Quality | A (Houston Medical Center) | A (Nashville hub) | Tie |
| Home Insurance | $2,500-$5,000/yr avg | $1,500-$2,500/yr avg | Tennessee |
The Property Tax Divide
The single biggest difference between Texas and Tennessee is property tax. At 1.68% average effective rate, Texas property tax is 2.6 times higher than Tennessee's 0.64%. On a $350,000 home:
| Home Value | Texas Annual Tax | Tennessee Annual Tax | TN Savings |
|---|---|---|---|
| $250,000 | $4,200 | $1,600 | $2,600 |
| $350,000 | $5,880 | $2,240 | $3,640 |
| $500,000 | $8,400 | $3,200 | $5,200 |
| $750,000 | $12,600 | $4,800 | $7,800 |
Note: After age 65, Texas's school district freeze eliminates 60-70% of this gap. Tennessee's EAV freeze applies at lower income thresholds. These are pre-exemption estimates based on average effective rates.