The Short Answer
No state income tax (the Hall investment-income tax was fully repealed in 2021), so active-duty pay is not taxed by Tennessee. Your base pay is set by the federal pay table — identical to every other state for your rank and years of service. What actually changes in Tennessee is your BAH (averaging $1,200/mo without dependents and $1,500/mo with dependents) and how Tennessee treats the taxable portion of your pay.
State tax status: ✓ TAX EXEMPT
2026 Worked Example — E-5, 6 Years, With Dependents in Tennessee
Here is how the math actually lands for a mid-career enlisted member stationed in Tennessee, built the way I read my own LES. Base pay and BAS are federal; the Tennessee BAH figure is the state average.
| Monthly line item | Amount | Taxable? |
|---|---|---|
| Base pay (E-5, over 6 yrs) | $3,874 | Yes (federal + state) |
| BAH with dependents (Tennessee avg) | $1,500 | No — tax-free |
| BAS (enlisted) | $476.95 | No — tax-free |
| Gross monthly entitlements | $5,850.95 | — |
| Taxable income (base pay only) | $3,874 | — |
| Est. Tennessee state income tax | $0 (no state income tax) | — |
Only the $3,874 of base pay is taxable — the $1,976.95 of BAH + BAS is completely tax-free. Run your exact rank, ZIP, and dependency status in the Military Pay Calculator for a precise estimate.
How Tennessee Taxes Each Type of Military Pay
Active-Duty Base Pay
No state income tax (the Hall investment-income tax was fully repealed in 2021), so active-duty pay is not taxed by Tennessee.
Guard & Reserve Drill Pay
No state income tax; Guard and Reserve drill pay is untaxed.
Military Retirement Pay
No state income tax; military retirement pay is not taxed.
VA Disability Compensation
VA disability compensation is tax-free federally and Tennessee has no income tax to apply.
SCRA & Residency in Tennessee
Tennessee is an attractive SCRA legal residence for servicemembers because it has no state income tax.
This is the single most misunderstood rule in military pay. Your home of record / state of legal residence — not your duty station — generally determines who can tax your military pay. Changing it is a deliberate act, not something that happens automatically when you PCS.
Major Military Installations in Tennessee
- Fort Campbell (straddles KY/TN)
- Naval Support Activity Mid-South (Millington)
- Arnold Air Force Base
- McGhee Tyson Air National Guard Base
BAH is set by the Military Housing Area covering your duty ZIP. Verify your exact rate at the official DoD BAH lookup.
Official Sources
FAQ — Military Pay in Tennessee
Does Tennessee tax my military base pay?
No state income tax (the Hall investment-income tax was fully repealed in 2021), so active-duty pay is not taxed by Tennessee.
Is my BAH taxed in Tennessee?
No. BAH is federally tax-free and is never counted as income for Tennessee state income tax, regardless of how Tennessee treats base pay.
Does Tennessee tax military retirement pay?
No state income tax; military retirement pay is not taxed.
I'm stationed in Tennessee but my home of record is elsewhere — who taxes me?
Tennessee is an attractive SCRA legal residence for servicemembers because it has no state income tax.