Property Tax Relief For Disabled Veterans
Tennessee Disabled Veteran Property Tax Exemptions in 2026
TCA §67-5-704 — Disabled Veteran Property Tax Relief
TN Dept. of Veterans Services — Property Tax Relief
UT CTAS — Disabled Veterans Property Tax
Tennessee reimburses 100% P&T disabled veterans for property taxes paid on the first $175,000 of their home’s market value. On a $350,000 home near Fort Campbell at a 0.56% effective rate, the reimbursement covers $980 of a $1,960 annual tax bill — saving $82 per month. Tennessee’s low baseline rates keep the total tax burden manageable, and the reimbursement structure means you pay taxes first and get money back from the state. No income test, no annual reapplication drama — just a moderate benefit on lower-value homes.
Next step:
Check Your VA Loan Eligibility
100% P&T Reimbursement
- State reimburses property taxes on the first $175,000 of market value
- You pay the full tax bill first, then receive a reimbursement check from the state
- No income test and no cap on the home’s total value — only the first $175K is reimbursed
- File with your county trustee’s office after paying your tax bill
Eligibility Requirements
- 100% permanent and total service-connected disability from the VA
- Also covers paraplegia, legal blindness, or loss/loss of use of two or more limbs
- Must own and occupy the property as primary residence — honorable discharge required
- Obtain your VA Summary of Benefits Letter confirming 100% P&T status
Filing And Deadlines
- Apply through your county trustee’s office — not the assessor
- Initial application with VA documentation and property ownership proof
- Reimbursement is processed after you pay the tax bill for the year
- Contact your county trustee for the application form and filing deadline
VA Loan Impact
- Reimbursement covers $490 to $980/year on typical homes near Fort Campbell
- You still pay the full tax into escrow — the reimbursement comes later as a check
- Lender may not reduce escrow based on expected reimbursement — confirm with servicer
- Budget for the full tax payment and treat the reimbursement as a bonus
Frequently Asked Questions
How much does the Tennessee property tax reimbursement save?
Tennessee reimburses property taxes on the first $175,000 of market value. On a $300,000 home at the statewide average rate of 0.56%, the reimbursement is approximately $980 per year — about $82 per month. On a home valued at $175,000 or less, the entire tax bill is reimbursed.
Do I get an exemption or a reimbursement in Tennessee?
Tennessee uses a reimbursement model, not a direct exemption. You pay the full property tax bill first, then the state reimburses you for the portion attributable to the first $175,000 of market value. This means your monthly escrow payment reflects the full tax amount.
Do veterans with partial disability ratings qualify in Tennessee?
No state-level reimbursement exists for partial ratings. Tennessee’s program is limited to 100% permanent and total service-connected disability, paraplegia, legal blindness, or loss of two or more limbs. Some local jurisdictions may offer additional relief — check with your county.
The Bottom Line Up Front
Tennessee reimburses 100% P&T disabled veterans for property taxes paid on the first $175,000 of their home’s full market value. This is a reimbursement — not an exemption. You pay the full tax bill through your escrow account, then the state sends you a check. On a $350,000 home near Fort Campbell at Tennessee’s average rate of 0.56%, the reimbursement covers roughly $980 per year. On a home valued at $175,000 or less, the entire tax bill is reimbursed. There is no income test and no partial disability benefit at the state level.
Tennessee’s property tax relief for disabled veterans is moderate. The $175,000 cap has not kept pace with home prices, which means the benefit covers a declining share of the total tax bill as home values rise. A veteran buying a $350,000 home gets reimbursed on half the value — the other half is taxed at full rate with no relief. That said, Tennessee has no state income tax and low property tax rates, so the total tax burden remains among the lightest in the country. The reimbursement is a useful supplement, not a primary financial driver.
What To Do Based On Your Situation
- Buying near Fort Campbell: Budget for the full property tax payment in your escrow. The reimbursement arrives after you pay, not before. If the home is under $175,000, you get the entire tax bill back. Above that, you get back the portion on the first $175K.
- Already own a home in Tennessee: If you have not applied, contact your county trustee’s office. File with your VA documentation and property ownership proof.
- Surviving spouse: Un-remarried surviving spouses of qualifying veterans continue to receive the reimbursement. File with the county trustee with the veteran’s documentation and death certificate.
How Does Tennessee’s Reimbursement Program Work?
Tennessee’s approach is different from most states. Instead of reducing your assessed value or exempting you from the tax, the state reimburses you after you pay. The reimbursement covers the property taxes attributable to the first $175,000 of the home’s full market value. Any value above $175,000 is not covered.
The practical effect is that your monthly mortgage payment includes escrow for the full property tax amount. After you pay (or your servicer pays through escrow), the state processes the reimbursement and sends a check. This means your debt-to-income ratio during VA loan qualification reflects the full tax payment — the reimbursement is not factored into your PITI calculation by most lenders.
Eligibility under TCA §67-5-704 is limited to veterans who have acquired a 100% permanent and total service-connected disability as determined by the VA, or who have paraplegia, permanent paralysis of both legs and lower body, legal blindness, or loss or loss of use of two or more limbs from a service-connected cause. Former POWs with 100% P&T ratings also qualify.
| Home market value | Reimbursed portion ($175K cap) | Tax on reimbursed portion (0.56%) | Tax on remaining value | Net annual cost after reimbursement |
|---|---|---|---|---|
| $175,000 | $175,000 | $980 (reimbursed) | $0 | $0 |
| $250,000 | $175,000 | $980 (reimbursed) | $420 | $420 |
| $350,000 | $175,000 | $980 (reimbursed) | $980 | $980 |
| $450,000 | $175,000 | $980 (reimbursed) | $1,540 | $1,540 |
Deal Math: A 100% P&T veteran buying a $340,000 home near Fort Campbell at 0.56% faces a $1,904 annual tax bill. The state reimburses $980 (the taxes on the first $175,000), leaving a net cost of $924/year — $77/month. Combined with the VA funding fee waiver (saving $7,310 upfront on a $340,000 loan at 2.15%), the total first-year benefit is $8,290. Over 30 years, the reimbursement totals $29,400 — modest but meaningful on a lower-priced home.
What Is The Reimbursement Worth In Real Dollars?
The reimbursement is fixed at the taxes attributable to $175,000 of market value, regardless of what the home is worth. This means the dollar amount is the same whether you buy a $175,000 starter home or a $500,000 house — the reimbursement maxes out around $980/year at the statewide average rate of 0.56%.
| County / area | Effective rate | Annual reimbursement (on $175K) | Monthly value | Median home price (2026 est.) |
|---|---|---|---|---|
| Montgomery (Fort Campbell/Clarksville) | 0.59% | $1,033 | $86 | $340,000 |
| Shelby (NSA Mid-South/Memphis) | 1.35% | $2,363 | $197 | $230,000 |
| Davidson (Nashville) | 0.68% | $1,190 | $99 | $460,000 |
| Hamilton (Chattanooga) | 0.65% | $1,138 | $95 | $340,000 |
| Knox (Knoxville) | 0.62% | $1,085 | $90 | $370,000 |
Notice Shelby County stands out. The Memphis area’s higher effective rate of 1.35% means the reimbursement is worth $2,363/year — over double the statewide average. Veterans near NSA Mid-South in Millington get the strongest dollar benefit in the state from this program. The combination of Shelby County’s higher rate and lower home prices means the reimbursement covers a larger share of the total tax bill.
Home Search Impact: The Tennessee reimbursement adds $82 to $197 per month in effective savings depending on county — but because it is a reimbursement (not a tax reduction), most lenders will not reduce your escrow to account for it. Your VA loan qualification is calculated on the full tax amount. The reimbursement is cash back in your pocket after closing, not a tool for increasing your buying power. Think of it as an annual refund, not a monthly payment reduction.
How Does This Affect Your VA Loan Math?
Tennessee’s reimbursement model creates a unique wrinkle for VA loan qualification. Unlike states with direct exemptions that reduce your tax bill on paper, Tennessee’s reimbursement means your lender sees the full tax amount when calculating your PITI and DTI.
- PITI reality: On a $350,000 home at 6.5% near Fort Campbell, your monthly PITI includes the full tax escrow of ~$163/month. The reimbursement comes as a separate check — it does not reduce your monthly mortgage payment on paper.
- DTI impact: Your lender uses the full PITI including taxes when calculating DTI. The reimbursement is not counted as income or used to offset the tax payment in AUS calculations. Your qualifying ratios reflect the full tax burden.
- Cash flow benefit: You receive approximately $980/year as a lump-sum reimbursement. Many veterans use this for escrow shortages, home maintenance, or debt reduction — all of which indirectly help your financial position.
- Escrow note: Some servicers may agree to reduce escrow if you can document the reimbursement history. This is not standard practice — ask your servicer, but do not count on it during qualification.
Who Is Eligible For Tennessee’s Property Tax Relief?
Eligibility is narrower than many states. Tennessee limits the reimbursement to veterans with specific severe disabilities — it is not available to all disabled veterans or even all veterans rated at 100%.
You qualify if you have a 100% permanent and total service-connected disability as determined by the VA, paraplegia or permanent paralysis of both legs and lower body from traumatic injury or disease to the spinal cord or brain, legal blindness, or loss or loss of use of two or more limbs from any service-connected cause. Former POWs rated 100% P&T also qualify. You must have been honorably discharged, own and occupy the property as your primary residence, and the property must be in Tennessee.
Veterans with partial disability ratings (10% to 90%) do not qualify for any state-level property tax relief in Tennessee. Some local jurisdictions may offer additional programs — check with your county for any local veteran tax benefits.
How Do You Apply In Tennessee?
Tennessee routes property tax relief through the county trustee’s office — not the assessor. The process is a reimbursement application, not a tax exemption filing.
- Obtain your VA documentation: VA Summary of Benefits Letter confirming 100% P&T service-connected disability. DD-214 showing honorable discharge.
- Contact your county trustee: Request the Disabled Veteran Property Tax Relief application. This is the county trustee — not the assessor, not the state.
- Submit the application: Include VA documentation, proof of property ownership, and proof of primary residence occupancy. Some counties also require a copy of your property tax bill.
- Pay your property taxes: You must pay the full tax bill. The reimbursement is processed after payment. Do not withhold taxes while waiting for approval — you will incur penalties.
- Receive the reimbursement: The state processes the reimbursement and sends a check for the taxes attributable to the first $175,000 of market value.
Process Watchpoint: Because Tennessee uses a reimbursement model, there is a timing gap between paying your tax bill and receiving the state’s check. Budget for the full tax payment through your escrow account. If you are on a tight cash flow, the reimbursement delay can be frustrating — but it does arrive. Contact your county trustee to understand the typical processing timeline in your area. Some counties process reimbursements within 60 days of payment, while others take longer.
Where Do Veterans File In Tennessee?
File with your county trustee’s office. Tennessee has 95 counties. Near major military installations, these are the key filing locations.
For Fort Campbell, file with the Montgomery County Trustee in Clarksville. Note that Fort Campbell straddles the Tennessee-Kentucky border — only Tennessee-side residents file through Tennessee’s program. If your home is on the Kentucky side, you would file under Kentucky’s separate program.
For NSA Mid-South in Millington, file with the Shelby County Trustee in Memphis. For veterans in the Nashville area, file with the Davidson County Trustee. The Nashville VA Regional Office can also provide guidance on the application process.
Do Surviving Spouses Keep The Reimbursement In Tennessee?
Yes. Tennessee extends property tax relief to the surviving spouse of a disabled veteran who was eligible at the time of death. The surviving spouse must continue to own and occupy the property as their primary residence. Remarriage does not automatically disqualify the surviving spouse in Tennessee — the statute extends relief to the surviving spouse without a remarriage restriction, though you should confirm current policy with the county trustee.
The surviving spouse receives the same reimbursement — property taxes on the first $175,000 of market value. The surviving spouse files with the county trustee using the veteran’s VA documentation, the death certificate, and their own identification.
Deal Math: A veteran buying a $250,000 home in Clarksville (Montgomery County) at a 0.59% effective rate pays $1,475/year in property taxes. The state reimburses $1,033 (taxes on $175,000), leaving a net cost of $442/year — just $37/month in net property taxes. Combined with the VA funding fee waiver ($5,375 on a $250,000 loan), the first-year benefit is $6,408. For a veteran buying at or below $175,000, the entire tax bill is reimbursed — zero net property tax cost.
The Bottom Line
Tennessee’s property tax relief for disabled veterans reimburses taxes on the first $175,000 of market value — saving $980 to $2,363 per year depending on your county’s rate. The reimbursement model means you pay first and get money back later, which does not reduce your monthly escrow or improve your VA loan DTI on paper. For veterans buying under $175,000, the entire tax bill is effectively covered. Tennessee’s low baseline rates and zero state income tax keep the total tax burden among the lowest in the country regardless of the exemption. File with your county trustee after closing and paying your first tax bill.
Frequently Asked Questions
Do veterans with partial disability ratings get any relief in Tennessee?
No. Tennessee’s state program is limited to 100% P&T service-connected disability, paraplegia, legal blindness, or loss of two or more limbs. Veterans with ratings of 10% to 90% do not qualify at the state level. Check with your county for any local programs.
Is there an income limit for Tennessee’s reimbursement?
No. Tennessee does not impose an income test for the disabled veteran property tax reimbursement. If you meet the disability and residency requirements, your income is not a factor.
Can I combine the reimbursement with the VA funding fee waiver?
Yes. The Tennessee property tax reimbursement is a state benefit. The VA funding fee waiver is a federal benefit. They are completely independent programs that can both be used simultaneously.
Does the reimbursement reduce my monthly mortgage payment?
Not directly. Your lender escrows for the full property tax amount. The reimbursement arrives as a separate check from the state after you pay. Some servicers may adjust escrow based on documented reimbursement history, but this is not standard.
Will the $175,000 cap increase?
There is pending legislation (SB 368) that would remove the market value cap entirely and require the state to reimburse 100% of property taxes for qualifying veterans. As of early 2026, this has not been enacted. Check the Tennessee General Assembly website for current status.
Should I apply before or after closing on my VA loan?
After closing — you must own and occupy the home first. Apply through your county trustee’s office as soon as you receive your first property tax bill. The sooner you apply, the sooner you begin receiving reimbursements.
Does the exemption apply to all property taxes including school and city?
Yes. The reimbursement covers all local property taxes — county, city, school district, and special assessments — on the first $175,000 of market value.
What if my home is worth exactly $175,000 or less?
The state reimburses your entire property tax bill. If the home is valued at or below $175,000, 100% of the taxes are covered by the reimbursement program.
Can I get the reimbursement on a manufactured home?
Yes, if it is your primary residence and you meet the disability requirements. The property must be assessed as real property in Tennessee for the reimbursement to apply.
How long does the reimbursement take to arrive after I pay?
Processing times vary by county. Most counties process reimbursements within 60 to 120 days of receiving your payment documentation. Contact your county trustee for their specific timeline.
Does IU (Individual Unemployability) qualify?
If the VA rates you as 100% permanent and total for compensation purposes due to IU, you should qualify under the 100% P&T category. Confirm with your county trustee that they accept IU as equivalent to a schedular 100% rating.
Is Fort Campbell in Tennessee or Kentucky for tax purposes?
Fort Campbell straddles the state line. Your tax program depends on which state your home is in. Homes in Clarksville and Montgomery County file through Tennessee. Homes on the Kentucky side file through Kentucky’s separate program. Your property address determines which state’s program applies.
