When property taxes jump from $129,000 to $589,000: Nashville has no income tax, but small businesses are getting crushed as costs skyrocket

"You just open up the envelope and say, 'What? This can't be right,'" said Morales, who had wanted to leave the business to his children. "Having a business you can give to your kids is something you dream about. I was like, 'Oh my God, I've just ruined their lives.'" (3)

"We were thinking it would go up 30, 40 percent; I could never have imagined it was going to go up 380 or 400 percent," added his daughter, Lauren.

A funding shortfall

As the Tax Foundation notes, states with high property taxes can rely heavily on them to make up for low — or no — tax in other categories, like zero income tax in the case of Tennessee (although it does have the second-highest combined state and local tax rate, at 9.61%, behind Louisiana, 10.11%, but ahead of Washington, 9.51%). (4)

Overall, Tennessee actually ranks among the lowest, at 41, for property tax rates by state, according to 2024 figures, the latest data available from the Tax Foundation. (4) As a percentage of owner-occupied housing value, the state had a 0.56% property tax rate, less than half that of New Jersey, with the highest, at 1.88%.

Property taxes are a local government's biggest source of funding, accounting for 70% of tax collected locally in the U.S. in 2023, according to the Tax Foundation. (4) They go to running schools, hospitals, police and fire departments, roads, water, sewer and other essential services — and when more people are using those services, cities and counties need more funding to operate them.

Nashville was among the 10 fastest-growing cities in the U.S. in 2025, and has increased in size by an average of 1.37% each year between 2022 and 2025, now with a population of more than 1.36 million. (5)

In 2025, tax rates were increased by 26% ($2.814 per $100 of assessed property value) for the so-called urban services district, and by 39% ($2,782 per $100 of assessed property value) for the general services district, with the city confirming that "tax bills increased due to tax rate increases, not just property value increases." (6)

That meant a painful double-whammy for Morales. According to documents he shared with the Financial Times, the assessed value of Acme Feed & Seed went from $9.6 million in 2021, the last year the city valued it, to a staggering $50 million in 2025. (1) Meaning he is now paying more than a quarter more in property tax, starting at 2.814%, depending on where in the urban services district a business is located, on a property suddenly assessed for $40.4 million more. (7)

What are taxpayers to do?

Nashville business owners, including Morales, are asking the city for relief from the recent reassessments. A 287-member group called Business Coalition sent a letter to Nashville Mayor Freddie O'Connell and Davidson County Assessor Vivian Wilhoite requesting that, for starters, businesses appealing reassessment be allowed to pay the previous year's tax rate until their case is heard. (8)

News Channel 5 Nashville reports that the group also asked for the Board of Equalization, the department that oversees appeals, to be expanded to speed up those appeals, and that property valuations be based on income rather than speculation during appeal hearings. (8)

Christian Paro, owner of Center 615, a shared workspace campus with nearly 100 suites in East Nashville, and one of the coalition leaders, says the property tax reassessment has caused him serious financial strain.

"I am late on, I think, about half of my bills now; I've only paid half of them," he said.