Tax Burden Lightened for Ages 65+

In May 2013, Governor Haslam and the Tennessee General Assembly helped lighten the burden on seniors by upping the Hall Income Tax exemption for taxpayers age 65 and over.

For tax years beginning in 2013 and beyond, taxpayers who are age 65 or older with total annual income from all sources of $33,000 or less for single filers, and $59,000 for joint filers, are exempt from the tax on dividends and interest income. The exemption levels have increased from 2012 when they were capped at $26,200 for single filers and $37,000 for joint filers.

The new law also amended Tennessee Code Annotated Section 67-2-104 which defines the income level for exemption as total annual income derived from any and all sources.

Total annual income from any and all sources means all income, including social security, pensions, annuities, and distributions on stock classified as non-taxable distributions for federal purposes, regardless of whether the income is taxable under federal income tax law. No losses are deductible in computing total annual income.

Persons who file a joint return qualify for the exemption if either spouse is age 65 or older and the total annual income is below the statutory limit.

About the Hall Income Tax:

Currently, the State of Tennessee does not have an income tax on income earned by individuals. However, Tennessee does have an income tax on unearned income which includes most stock dividends and some types of interest. This tax is due annually and is remitted along with the completed Tennessee Hall Tax return (Form INC 250). The current rate of tax is six percent and there is a $1,250 standard deduction for single filers who are not exempt and a combined $2,500 standard deduction for joint filers.

Summary: If you have dividend and interest income, reside in the state of Tennessee, and are 65 years of age or older, please ensure that your tax preparer has your correct date of birth and is considering you for the appropriate exemptions.