✦ State Tax Analysis · 2026 · Three-Way Comparison
Texas vs Florida vs Tennessee
Taxes 2026
"All three have no income tax, so they're the same, right?" Wrong. Total tax burden varies by thousands of dollars per year once you factor in property tax, sales tax, and entity-level obligations. We ran four taxpayer profiles through all three states — every dollar sourced from the State Tax Stack.
TX Sales Tax (avg)
8.25%
State 6.25% + local avg 2.0%
FL Sales Tax (avg)
7.01%
State 6.00% + local avg 1.01%
TN Sales Tax (avg)
9.55%
Highest in the US
TX Property Tax Rate
1.60%
Among highest in US
FL Property Tax Rate
0.83%
Avg w/ homestead exemption
TN Property Tax Rate
0.64%
Among lowest in US
Head-to-Head: State Tax Overview
The three states are similar where everyone looks (income tax: $0 across the board) and different where most people don't look (property tax, sales tax, and entity-level obligations). Texas's property tax problem is the biggest hidden cost. Tennessee's sales tax is a stealth hit on everyday spending. Florida threads the needle best across most profiles.
| Tax Category | Texas | Florida | Tennessee |
|---|---|---|---|
| Personal income tax | $0 | $0 | $0 |
| Hall Tax (investment income) | N/A | N/A | Eliminated 2022 |
| State sales tax rate | 6.25% | 6.00% | 7.00% |
| Combined avg sales tax (incl. local) | 8.25% | 7.01% ✓ lowest | 9.55% ⚠ highest US |
| Effective property tax rate (avg) | 1.60% ⚠ high | 0.83% | 0.64% ✓ lowest |
| Median home value (approx.) | $305,000 | $400,000 | $300,000 |
| Avg annual property tax (median home) | $4,880 | $3,154 (after homestead) | $1,920 |
| S-Corp / LLC entity tax | $0 (below $2.47M threshold) | $0 ✓ none | 6.5% excise on net income ⚠ |
| Franchise tax (businesses) | $0 (below $2.47M revenue) | None | Eliminated by HB 1893 (2024) |
| Capital gains (state) | $0 | $0 | $0 |
| Estate / inheritance tax | None | None | None |
| Social Security taxation (state) | $0 | $0 | $0 |
⚠ The angle nobody talks about
All three states have $0 state income tax. But Texas's property tax (1.60%) is
2.5× Tennessee's (0.64%) and nearly 2× Florida's (0.83%). On a median home,
that's a $2,960–$4,880/year difference before you earn a dollar of income. The no-income-tax branding
obscures a massive hidden cost for Texas homeowners.
4 Taxpayer Profiles: Three-State Comparison
Every profile uses the same federal tax baseline — identical across all three states. Only state-level and local taxes change. Assumptions: single filer, standard deduction, 2026 rates. Federal taxes sourced from IRS Rev. Proc. 2025-61 and OBBBA adjustments.
1
Freelancer / Sole Proprietor
$100,000 net profit · Single · Schedule C · No entity · $35K annual taxable spending
Sole proprietors are not subject to Texas franchise tax or Tennessee excise tax — those apply to entities. The differentiators here are entirely sales tax and property tax.
| Tax Component | Texas | Florida | Tennessee | Notes |
|---|---|---|---|---|
| SE Tax (federal) | $14,130 | $14,130 | $14,130 | 15.3% × 92.35% × $100K. Identical in all states. |
| Federal Income Tax | $7,358 | $7,358 | $7,358 | After SE deduction + 23% QBI (OBBBA). Identical in all states. |
| State Income Tax | $0 | $0 | $0 | All three states: $0 personal income tax. |
| Entity Tax (franchise/excise) | N/A — sole prop | N/A — none | N/A — sole prop | Entity taxes don't apply to Schedule C sole proprietors. |
| Sales Tax (est. $35K spend) | $2,888 | $2,454 | $3,343 | TX 8.25% · FL 7.01% · TN 9.55%. Biggest TN disadvantage. |
| Property Tax (median home) | $4,880 | $3,154 | $1,920 | TX $305K@1.60% · FL $400K@0.83% w/homestead · TN $300K@0.64%. |
| Total Annual Tax Burden | $29,256 | $27,096 | $26,751 | ✓ TN wins |
| Effective Rate (% of $100K) | 29.3% | 27.1% | 26.8% | TN saves $2,505/yr vs TX · $345/yr vs FL |
🏆 1st — Tennessee
$26,751/yr
26.8% effective rate
2nd — Florida
$27,096/yr
27.1% effective rate · +$345 vs TN
3rd — Texas
$29,256/yr
29.3% effective rate · +$2,505 vs TN
Why TN wins: The property tax gap is decisive. Tennessee homeowners pay ~$1,920/year vs. $4,880 in Texas.
TN's higher sales tax ($889/yr more than FL) is more than offset by its property tax advantage ($2,960/yr cheaper than TX, $1,234/yr cheaper than FL).
The margins are narrow between TN and FL — if you rent rather than own, FL's lower sales tax makes it competitive.
2
S-Corp Owner
$150,000 net profit · 60% salary ($90K W-2) / 40% distributions ($60K) · Single · $45K annual taxable spending
This is where Tennessee's 6.5% excise tax on entity net income becomes a major factor. On $150K net, Tennessee bills the S-Corp $9,750 before the owner pays a dime in personal taxes. Texas and Florida impose $0 on this profile at these revenue levels.
| Tax Component | Texas | Florida | Tennessee | Notes |
|---|---|---|---|---|
| Federal Income Tax | $21,936 | $21,936 | $21,936 | Salary + distributions, std deduction, 23% QBI on distributions. Identical. |
| FICA Payroll (both sides) | $13,770 | $13,770 | $13,770 | 7.65% × $90K × 2 (employee + employer share). Identical. |
| State Income Tax | $0 | $0 | $0 | All three states: $0 personal income tax on salary or distributions. |
| TX Franchise Tax | $0 | N/A | N/A | TX S-Corp well below $2.47M "no tax due" revenue threshold. $0. |
| FL S-Corp Entity Tax | N/A | $0 | N/A | Florida imposes no entity-level income tax on S-Corporations. $0. |
| TN Excise Tax (6.5% of net) | N/A | N/A | $9,750 | 6.5% × $150K net income. Entity-level; deductible federally. TN Code § 67-4-2007. |
| Sales Tax (est. $45K spend) | $3,713 | $3,155 | $4,298 | TX 8.25% · FL 7.01% · TN 9.55% on $45K spending. |
| Property Tax (median home) | $4,880 | $3,154 | $1,920 | Same property assumptions as Profile 1. |
| Total Annual Tax Burden | $44,299 | $42,015 | $51,674 | ✓ FL wins TN worst ⚠ |
| Effective Rate (% of $150K) | 29.5% | 28.0% | 34.4% | TN excise tax adds 6.5 percentage points vs FL/TX baseline |
🏆 1st — Florida
$42,015/yr
28.0% effective rate
2nd — Texas
$44,299/yr
29.5% effective rate · +$2,284 vs FL
3rd — Tennessee ⚠
$51,674/yr
34.4% eff. rate · +$9,659 vs FL
The Tennessee trap for business owners: Tennessee's 6.5% excise tax turns a low-property-tax haven
into the most expensive of the three states for S-Corp owners. At $150K net income, TN costs $9,659 more per year
than Florida — nearly wiping out two years of property tax savings. If your business operates as an S-Corp or
taxable entity, Florida is clearly the right choice over Tennessee.
Note on TX Franchise Tax: The "no tax due" threshold (~$2.47M gross revenue) means the vast majority of small businesses pay $0. Growing businesses above ~$2.47M gross do owe franchise tax at 0.375% of margin — still far below Tennessee's 6.5% excise.
Note on TX Franchise Tax: The "no tax due" threshold (~$2.47M gross revenue) means the vast majority of small businesses pay $0. Growing businesses above ~$2.47M gross do owe franchise tax at 0.375% of margin — still far below Tennessee's 6.5% excise.
3
W-2 Employee
$100,000 salary · Single · Standard deduction · $35K annual taxable spending
W-2 employees have no entity-level exposure. The comparison reduces to three variables: state income tax ($0 everywhere), sales tax on spending, and property tax on housing. Federal taxes and FICA are identical in all three states.
| Tax Component | Texas | Florida | Tennessee | Notes |
|---|---|---|---|---|
| Federal Income Tax | $13,615 | $13,615 | $13,615 | W-2, standard deduction ($15K), 2026 brackets. Identical in all states. |
| Employee FICA | $7,650 | $7,650 | $7,650 | 7.65% of $100K salary. Identical in all states. |
| State Income Tax | $0 | $0 | $0 | $0 in all three states. |
| Sales Tax (est. $35K spend) | $2,888 | $2,454 | $3,343 | TX 8.25% · FL 7.01% · TN 9.55%. |
| Property Tax (median home) | $4,880 | $3,154 | $1,920 | TX $305K@1.60% · FL $400K@0.83% · TN $300K@0.64%. |
| Total Annual Tax Burden | $29,033 | $26,873 | $26,528 | ✓ TN wins |
| Effective Rate (% of $100K) | 29.0% | 26.9% | 26.5% | TN saves $2,505/yr vs TX · $345/yr vs FL |
🏆 1st — Tennessee
$26,528/yr
26.5% effective rate
2nd — Florida
$26,873/yr
26.9% effective rate · +$345 vs TN
3rd — Texas
$29,033/yr
29.0% effective rate · +$2,505 vs TN
Renters, take note: These property tax figures assume homeownership. If you rent,
property taxes are embedded in your rent (landlords pass costs through), but you lose direct control.
In a rental market, TN's lower property tax base can translate to lower rents over time, but this is harder
to measure precisely. The TN vs FL gap for W-2 employees ($345/yr if you own) is narrow —
Florida's warm climate and absence of income-tax risk (for remote workers with CA or NY clients) may tip the scale.
4
Retiree
$60,000 income ($20K Social Security + $40K pension) · Single · Age 67 · $30K annual taxable spending
All three states tax Social Security at $0 and have no pension tax. The Hall Tax in Tennessee (which taxed dividends and interest) was eliminated effective January 1, 2022 — investment income is now also tax-free in Tennessee. For retirees, this comparison is entirely about sales tax and property tax.
| Tax Component | Texas | Florida | Tennessee | Notes |
|---|---|---|---|---|
| Federal Income Tax | $4,562 | $4,562 | $4,562 | 85% of SS taxable; 65+ std deduction $17K; income $55.5K taxable. Identical. |
| State Income Tax | $0 | $0 | $0 | $0 in all three states. SS, pension, and investment income all exempt. |
| TN Hall Tax (dividends/interest) | N/A | N/A | $0 — eliminated Jan 2022 | Tennessee fully repealed the Hall income tax on investment income. Gone. |
| Sales Tax (est. $30K spend) | $2,475 | $2,103 | $2,865 | TX 8.25% · FL 7.01% · TN 9.55% on $30K consumer spending. |
| Property Tax (median home) | $4,880 | $2,947 | $1,920 | TX $305K@1.60% · FL $380K@0.83% (retiree, slightly smaller home) · TN $300K@0.64%. |
| Total Annual Tax Burden | $11,917 | $9,612 | $9,347 | ✓ TN wins |
| Effective Rate (% of $60K) | 19.9% | 16.0% | 15.6% | TN saves $2,570/yr vs TX · $265/yr vs FL |
🏆 1st — Tennessee
$9,347/yr
15.6% effective rate
2nd — Florida
$9,612/yr
16.0% effective rate · +$265 vs TN
3rd — Texas
$11,917/yr
19.9% effective rate · +$2,570 vs TN
TX property tax note for seniors: Texas offers a homestead exemption for seniors 65+ that provides
a $100,000 school district property tax exemption and freezes school district taxes at the year the exemption is
first claimed. In practice, this can reduce effective property tax rates for senior homeowners in Texas by 0.4–0.8
percentage points depending on local school millage. Even with this exemption, Texas still typically exceeds
Tennessee's effective property tax burden for retirees on comparable homes.
Summary: Best State by Profile
Four profiles, three states, one table. Florida wins on entity-level obligation elimination. Tennessee wins on property-tax-sensitive profiles. Texas finishes last everywhere it's measured due to property tax.
| Profile | Texas Total | Florida Total | Tennessee Total | Winner | Runner-Up |
|---|---|---|---|---|---|
| Freelancer — $100K net | $29,256 (29.3%) | $27,096 (27.1%) | $26,751 (26.8%) | TN | FL by $345 |
| S-Corp Owner — $150K net | $44,299 (29.5%) | $42,015 (28.0%) | $51,674 (34.4%) ⚠ | FL | TX by $2,284 |
| W-2 Employee — $100K salary | $29,033 (29.0%) | $26,873 (26.9%) | $26,528 (26.5%) | TN | FL by $345 |
| Retiree — $60K income | $11,917 (19.9%) | $9,612 (16.0%) | $9,347 (15.6%) | TN | FL by $265 |
⚠ The real verdict
Tennessee wins 3-of-4 profiles — but only for individuals without business entities. If you operate an S-Corp or LLC,
Tennessee's 6.5% excise tax is a $9,750 surprise on a $150K business that doesn't exist in Texas or Florida.
Florida is the safest all-around choice — it doesn't win outright on any individual profile, but it finishes second everywhere and avoids Tennessee's business owner trap.
Texas finishes last in all four profiles due to its outsized property tax burden.
The Hidden Costs: What No-Income-Tax Doesn't Tell You
When three states are all advertised as "no income tax," the meaningful differences are in the costs that don't get the same marketing. Here's what each state hides in plain sight.
Texas ⚠
Property Tax: 1.60% Effective Rate
Texas has one of the highest effective property tax rates in the country.
On a $305,000 median home, that's $4,880/year — versus $1,920 in Tennessee.
The difference over 10 years: $29,600. Texas funds its government through property taxes
precisely because it has no income tax. The trade is explicit; the marketing isn't.
Tennessee ⚠
Highest Sales Tax in the US: 9.55%
Tennessee's combined state and local sales tax averages 9.55% —
the highest combined rate in the United States. On $35,000 in annual spending,
that's $3,343/year vs. $2,454 in Florida. The annual gap: $889.
Tennessee also taxes food at a reduced rate (4% state), which partially helps lower-income residents.
Tennessee ⚠⚠ (Business Owners)
6.5% Excise Tax on Entity Net Income
Tennessee imposes a 6.5% excise tax on the net earnings of entities (S-Corps, LLCs taxed as corporations)
doing business in Tennessee. Tennessee's franchise tax was eliminated by HB 1893 (2024),
but the excise tax remains. For an S-Corp with $150K net income: $9,750/year.
This makes Tennessee the most expensive of the three states for business owners —
by a wide margin.
Texas — Entity Owners
TX Franchise Tax: Mostly $0 for Small Businesses
Texas franchise tax sounds scary, but for most small businesses it's effectively $0.
The 2026 "no tax due" threshold is approximately $2.47 million in total revenue.
Businesses below this threshold owe nothing. Above it, the rate is 0.375% of taxable margin —
far lower than Tennessee's 6.5% excise. Sole proprietors are never subject to the franchise tax.
Florida — Unique Risk
Property Insurance: Hurricane Premium
Florida's hidden cost isn't a tax — it's insurance. Homeowners in coastal Florida can pay
$4,000–$8,000/year in property insurance premiums (vs. $1,200–$2,000 in inland Texas or Tennessee).
For a coastal Florida homeowner, this can partially or fully erase the property tax advantage.
Factor in total housing cost, not just property tax, when comparing.
Tennessee — Retiree Win
Hall Tax: Eliminated in 2022
Tennessee used to tax dividends and interest under the Hall income tax (up to 1% in 2020,
then phased down). The Hall Tax was fully eliminated effective January 1, 2022.
This matters for retirees and investors living on dividend income, bond interest,
or CD earnings — Tennessee now imposes zero state tax on any form of investment income.
This is a recent and significant change that makes Tennessee more attractive for income-portfolio retirees.
The Bottom Line: Ranked by Profile
Three states, all with $0 income tax, and the total burden gap between best and worst runs from $345/year (W-2, TN vs FL) to $9,659/year (S-Corp, FL vs TN). The winner depends entirely on how you earn and what you own.
Freelancer $100K
🏆 Tennessee
$26,751/yr · saves $2,505 vs TX
S-Corp Owner $150K
🏆 Florida
$42,015/yr · saves $9,659 vs TN
W-2 Employee $100K
🏆 Tennessee
$26,528/yr · saves $2,505 vs TX
Retiree $60K
🏆 Tennessee
$9,347/yr · saves $2,570 vs TX
Florida is the safest all-around choice if you run a business through an S-Corp or LLC. Tennessee wins for individuals who don't have entity-level exposure — property taxes are low enough to overcome the sales tax penalty. Texas finishes last across the board — no income tax marketing can't offset 1.60% property taxes on a $305K home.
Sources: Texas Comptroller (franchise tax threshold, property tax data); Florida DOR (sales and use tax, homestead exemption); Tennessee DOR (franchise & excise tax, Hall Tax repeal); TaxStackHub State Tax Stack (2026 rates); IRS Rev. Proc. 2025-61 (2026 federal brackets, OBBBA); Tennessee Code Annotated §§ 67-4-2007, 67-4-2112; Texas Tax Code Chapter 171; Florida Statutes § 196.031.
Run your exact numbers with the State Tax Stack
Compare Texas, Florida, Tennessee — or any other state — with your actual income. Free, no signup.
Frequently Asked Questions
Which no-income-tax state has the lowest total taxes in 2026?
It depends on your taxpayer profile. Tennessee wins for freelancers ($26,751/yr), W-2 employees ($26,528/yr),
and retirees ($9,347/yr) primarily because of its ultra-low property tax (0.64% effective rate).
Florida wins for S-Corp owners and business entities ($42,015/yr) because Tennessee imposes a 6.5% excise tax
on entity net income. Texas finishes last across all four profiles due to its high property tax rate (1.60%).
All three states have $0 personal income tax. Source: TaxStackHub State Tax Stack (2026 rates).
Is Tennessee really a low-tax state?
For individuals (W-2 employees, freelancers, retirees): yes. Tennessee's property tax rate (0.64% effective)
is among the lowest in the US, and the Hall Tax on investment income was eliminated in 2022.
For business owners: no. Tennessee's 6.5% excise tax on entity net income can cost S-Corp owners
$9,750+ per year — making Tennessee the most expensive no-income-tax state for business entities.
Tennessee's sales tax (9.55% avg combined) is also the highest in the country and partially offsets
its property tax advantage.
Does Texas have higher taxes than Florida?
Yes. Across all four profiles in this analysis, Texas is more expensive than Florida every time.
The primary driver: Texas property taxes average 1.60% effective rate vs. Florida's 0.83%.
On a $305,000 Texas median home, that's $4,880/year vs. approximately $3,154/year for a $400,000
Florida home after the homestead exemption. Texas also has a slightly higher combined sales tax
(8.25% vs. Florida's 7.01%). Annual difference: $2,160–$2,305 depending on the profile, in Florida's favor.
What is the Tennessee franchise and excise tax in 2026?
Tennessee's franchise tax was largely eliminated by HB 1893 (2024) and provides for one-time refunds of
franchise taxes paid. The excise tax remains: 6.5% on the net earnings of entities doing business in Tennessee.
For a Tennessee S-Corp or LLC taxed as a corporation with $150,000 net income, this means approximately
$9,750 in Tennessee excise tax — an entity-level cost before any personal income taxes.
Sole proprietors (Schedule C filers with no entity) are not subject to this tax.
Source: Tennessee Code Annotated §§ 67-4-2007, 67-4-2112.
Did Tennessee really eliminate the Hall income tax?
Yes. Tennessee's Hall income tax on interest and dividends was phased down from 6% (2015) to 1% (2020)
and fully repealed effective January 1, 2022. Since then, Tennessee residents pay $0 in state income tax
on any income type — wages, salary, self-employment income, S-Corp distributions, Social Security,
pension, capital gains, or investment income. This is a significant benefit that many "Tennessee taxes"
articles miss because they were written before 2022. Source: Tennessee Public Acts 2016, Chapter 1010;
Tenn. Code Ann. § 67-2-101.
Which state wins for retirees: Texas, Florida, or Tennessee?
Tennessee wins on total tax burden for retirees on $60K income: $9,347/year vs. $9,612 in Florida and
$11,917 in Texas. Key factors: Tennessee has no state income tax (including on pension and Social Security),
no Hall Tax on investment income since 2022, and the lowest property tax rate (0.64%) of the three states.
Florida is close behind; the main difference is property tax ($2,947 vs. $1,920). Texas's high property
taxes ($4,880) make it significantly more expensive for homeowners. Cost-of-living, healthcare access,
and Florida's hurricane insurance costs should factor into any relocation decision.
What is the Texas franchise tax "no tax due" threshold for 2026?
For 2026, the Texas franchise tax "no tax due" threshold is approximately $2.47 million in total revenue
(the exact figure is indexed and announced by the Texas Comptroller annually). Businesses with total revenue
below this threshold owe $0 in Texas franchise tax, regardless of profit. For most small businesses —
freelancers with S-Corps, small agencies, consultants — this threshold is well above their revenue.
For businesses above the threshold, the margin tax rate is 0.375% for most businesses and 0.331% for
the EZ computation. This is dramatically lower than Tennessee's 6.5% excise tax on net income.
Sole proprietors are never subject to the Texas franchise tax. Source: Texas Tax Code § 171.002.
What's the best no-income-tax state for an S-Corp owner?
Florida is the clear winner for S-Corp owners in 2026. Florida imposes no entity-level income tax on
S-Corporations, no SDI, no franchise tax equivalent, and has lower property taxes and sales taxes than Texas.
An S-Corp owner with $150K net profit pays an estimated $42,015/year total (federal + state + local) in Florida
vs. $44,299 in Texas and $51,674 in Tennessee (the excise tax alone adds $9,750 in Tennessee).
Texas is second-best for S-Corp owners, primarily because the franchise tax threshold means most small S-Corps
pay $0 in Texas entity taxes. Source: TaxStackHub calculations, 2026 rates.