Economy of Tennessee

The U.S. state of Tennessee contains a diverse economy that is made up of many sectors with a mix of industries including manufacturing, agriculture, healthcare, and tourism. The state is home to several major corporations, including FedEx, the largest courier company in the world, and AutoZone, the largest retailer of auto parts in the United States.

Agriculture is an important part of the economy of Tennessee, with the state ranking among the top producers of soybeans, tobacco, and cotton in the United States. The state is also home to a thriving healthcare industry, with Nashville being a major hub for healthcare services and research. Tourism is another significant contributor to the economy of Tennessee, with millions of visitors each year drawn to the state's natural beauty and cultural attractions, including the Great Smoky Mountains National Park and the Country Music Hall of Fame.

As of 2020, Tennessee had a gross state product of $364.5 billion. In 2019, the state's per capita personal income was $29,859. The median household income was $58,516 in 2021. About 13.9% percent of the population was below the poverty line. In 2018, the state reported a total employment of 2,683,214, and a total number of 138,269 employer establishments.

For 2012, the state held an asset surplus of $533 million, one of only eight states in the nation to report a surplus. Tennessee is a right to work state, as are most of its Southern neighbors. Unionization has historically been low and continues to decline as in most of the U.S. generally.

Tennessee has a reputation as low-tax state and is usually ranked as one of the five states with the lowest tax burden on residents. It is one of nine states that do not have a general income tax; the sales tax is the primary means of funding the government. The Hall income tax was a tax imposed on most dividends and interest. The tax rate was 6% from 1937 to 2016, but was completely phased out by January 1, 2021. The first $1,250 of individual income and $2,500 of joint income was exempt from this tax.

The state's sales and use tax rate for most items is 7%, the second-highest in the nation, along with Mississippi, Rhode Island, New Jersey, and Indiana. Food is taxed at a lower rate of 4%, but candy, dietary supplements and prepared food are taxed at 7%. Local sales taxes are collected in most jurisdictions at rates varying from 1.5% to 2.75%, bringing the total sales tax to between 8.5% and 9.75%, with an average rate of about 9.5%, the nation's highest average sales tax. Intangible property tax is assessed on the shares of stock of stockholders of any loan, investment, insurance, or for-profit cemetery companies. The assessment ratio is 40% of the value times the jurisdiction's tax rate. Since January 1, 2016, Tennessee has had no inheritance tax.

While the sales tax remains the main source of state government funding, property taxes are the primary source of revenue for local governments.

Tennessee has the eighth-most farms in the nation, which cover more than 40% of the state's land area, and have an average size of about 155 acres (0.63 km²). Cash receipts for crops and livestock have an estimated annual value of $3.5 billion, and the agriculture sector has an estimated annual impact of $81 billion on the state's economy.