Staff Photo by John Rawlston / Lookout Mountain is seen in this aerial photo taken Feb. 19, 2007.

This story was updated on Tuesday, June 15, 2021, at 4 p.m. to reflect that zip code 38120 is the East Memphis Shelby Farms area.

The Tennessee town of Lookout Mountain boasts the highest average household income of any ZIP code in the state, according to new data estimates from the U.S. Bureau of Census.

Like its geography that rises nearly 1,200 feet above its urban neighbor, Lookout Mountain's median household income towers over its urban neighbor. New census bureau estimates peg the average household income on Lookout Mountain in 2019 at $219,922 — triple the average income of households in Chattanooga.

"We have a number of heavy hitters and families with considerable resources that live here and that pushes up the average in a small town like this," said Walker Jones, mayor of Lookout Mountain, who has served on the town council for more than a decade. "But Lookout Mountain, like all communities, has a mix of incomes and some people struggling to get by. We're only a 12-minute drive to downtown Chattanooga, and most people drive into Chattanooga every day but love living in this special place — almost like a gated island on top of the mountain."

Nashville has the most ZIP codes among the top 10 wealthiest areas of the state, but even its wealthiest ZIP code in Oak Hill and Forest Hills didn't match the elevated income of those living atop Lookout Mountain. Three top 10 ZIP codes for household income in Tennessee were in Shelby County in West Tennessee.

"There is still a lot of old wealth that was made in the past and it has been passed down for generations to those still living on Lookout Mountain," said Dean Arnold, who authored the book "Old Money, New South" about many of the wealthiest families in the area. "But as I wrote a lot about in my book, that wealth and all of the charitable foundations created by those in this area really helped to shape our community and create a lot of the riverfront development, local parks, hospital services and many other amenities we all enjoy in Chattanooga."


The extra income for Lookout Mountain is not without its cost, at least for the town's government. Because of its higher income, especially income derived from dividends, interest and investments, Lookout Mountain has been the hardest hit municipality from Tennessee's phase out of the state's Hall Income Tax on such earnings and is looking to raise its property tax this year for the second time in three years.

Last month, the town council voted on first reading to adopt a budget that will boost property tax collections about 5% in the next fiscal year to help make up for lost income from the city's share of what its residents pay in the dividend tax.

Five years ago when the Hall income tax was still at the peak 6% level on out-of-state dividends, interest and investment income subject to the Hall income tax generated nearly $700,000 in revenues for the town of Lookout Mountain, or more than 20% of the city's budget that year.

The state legislature agreed in 2016 to start phasing out the Hall income tax, to eliminate the last remaining income tax in the state. Three-eighths of Hall income tax, or 37.5 percent of the revenues collected in each city, were kept by local governments.

Although Lookout Mountain government has suffered a revenue loss from the phase out of the Hall income tax, the residents of Lookout Mountain have collectively gained even more in reduced taxes on passive income streams.

Wealthiest ZIP codes in Tennessee

Among the 627 zip codes in Tennessee, the highest average income in 2019 was on Lookout Mountain in Hamilton County, according to new Census estimates.

1. Lookout Mountain - 37350, mean income of $219,922

2. Nashville area in parts of Oak Hill and Forest Hills - 37220, mean income of $207,647

3. Germantown near Memphis - 38139, mean income of $200,119

4 . Belle Meade in Nashville area - 37215, mean income of $196,456

5. Brentwood in Nashville area - 37027, mean income of $195,976

6. Franklin near Nashville 37069, mean income of $188,320

7. Nashville - 37205, mean income of $177,404

8. East Memphis - 38120, mean income of $160,218

9. Arrington in Williamson County - 37014, mean income of $157,646

10. Eads in Shelby County - 38028, mean income of $152,171

Source: Income by zip code based upon Bureau of Census estimates for median household income in 2019.







State Sen. Todd Gardenhire, the Chattanooga Republican who represents Lookout Mountain in the Tennessee General Assembly, said phasing out the Hall income tax is encouraging more wealthy families to stay and grow their businesses in Tennessee rather than to relocate to states like Florida without any income tax.

"It's also been a big draw for many people to relocate to Tennessee, especially retirees and wealthy individuals, and that is helping our economy to outperform the nation," Gardenhire said.

The tax derives its name from State Sen. Frank Hall, who introduced the tax in Tennessee in 1929 to help Tennessee banks compete by applying a tax on out-of-state interest and dividend payments without imposing such a tax on local bank interest payments.

It was the only form of a personal income tax in the state and was repealed to make Tennessee a completely income tax-free state. The state constitution bars taxing payroll income, either by the state or any local government.


To the municipal officials who have complained about the loss of tax revenues for city governments from the repeal of the Hall income tax, Gardenhire said he plans to introduce legislation next year to allow cities to impose a similar tax on dividend, interest and investment incomes on their own and keep all of those collections in their community.

"If cities like Lookout Mountain or others like the Hall income tax, I plan to introduce a bill that would allow them to raise such a tax themselves," Gardenhire said. "I don't know that any cities will, but I'm willing to give them that option, and they will be able to keep all of those funds from such a tax, not just what the Hall income tax gave back to cities in the past."

Even with a slight increase in property tax bills, Gardenhire said most households fare better with the repeal of the Hall tax.

Contact Dave Flessner at or at 423-757-6340.