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For more information regarding taxes please call 901-537-2904
Fact Index
| Sales Tax |
5% state sales tax, but food and clothing (for articles up to $150) are exempt. There are no local sales taxes. |
| Income |
Officially 5.95%, the actual amount you pay varies each year depending on the amount of the deductions set by the state Legislature. Unearned income is taxed at 12% - although voters recently approved a question to cut that to the same rate as the income tax. You can deduct up to $2,500 of federal social-security taxes each year; renters can deduct up to 50% of their rent (to a maximum of $2,500) each year. |
| Property |
Varies from community to community. Under Proposition 2 1/2, communities cannot increase the total amount of revenue from property taxes each year by more than 2.5%. However, this does not mean that your individual taxes cannot rise
by more than 2.5%. Under state law, communities must revalue
property every three years. If the assessors determine that your home has risen in value more than those of other residents', then your tax can go up by far more than 2.5% (because it's the total revenue from all property that's regulated). Of course, this also means that your tax could go down if everybody else's property rises in value more than yours. There's more. Prop. 2 1/2 lets towns ask voters to override the limit. The law also lets communities tax different types of properties at different rates; many places tax industrial and commercial properties at higher rates in an attempt to give a break to homeowners. Boston also has a special deduction for people whose primary residence is in the city.
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