If you’re asking “what is the sales tax in Tennessee,” you’re not alone—understanding how much you’ll actually pay at checkout matters, especially when you’re budgeting for big purchases. Tennessee’s sales tax system is straightforward on the surface, but there are nuances that can catch you off guard. Let me break down exactly how Tennessee’s sales tax works, what items are taxed, and how it compares to neighboring states.
Table of Contents
- Tennessee’s State Sales Tax Rate
- Local Sales Tax Rates by County
- What Items Are Subject to Sales Tax
- Tax Exemptions and Exclusions
- Groceries and Food Items
- Vehicle and Auto Sales Tax
- How Tennessee Compares to Neighbors
- Tennessee Tax-Free Weekends
- How to Calculate Your Total Tax
- Frequently Asked Questions
Tennessee’s State Sales Tax Rate
Tennessee imposes a 9.55% state sales tax as of 2024. But here’s the thing—that number you see on your receipt probably won’t be exactly 9.55%. That’s because Tennessee’s state rate gets combined with local taxes that vary by county, and some municipalities add their own additional percentage on top of that.
The state-level 9.55% rate has been consistent for several years, but it’s composed of multiple components. Understanding this breakdown helps you see where your tax dollars actually go. The state collects this revenue and distributes portions to local governments, which is why the total rate you pay depends heavily on where you’re shopping.
One thing that surprises people: Tennessee doesn’t have an income tax, which is why the state relies more heavily on sales and consumption taxes to fund operations. This is actually a significant financial advantage if you’re earning income in Tennessee, but it does mean sales tax rates are higher than in states with income taxes.
Local Sales Tax Rates by County
This is where it gets interesting. Your actual sales tax in Tennessee depends on which county and city you’re in. The total combined rate ranges from about 8.55% to 9.75% depending on location, with some areas even hitting higher percentages.
For example:
- Shelby County (Memphis area): 9.25% combined rate
- Davidson County (Nashville area): 9.25% combined rate
- Hamilton County (Chattanooga area): 9.45% combined rate
- Knox County (Knoxville area): 9.25% combined rate
- Williamson County (Franklin area): 9.25% combined rate
Some smaller counties and rural areas may have slightly lower rates. The best way to know your exact rate is to check the Tennessee Department of Revenue website, which maintains an updated list of all county and city rates.
Local taxes fund schools, infrastructure, and municipal services in your area. When you’re comparing costs between shopping in different counties, remember that a 0.2% difference might seem small, but it adds up on larger purchases.
What Items Are Subject to Sales Tax
Most tangible goods in Tennessee are subject to sales tax. This includes:
- Clothing and accessories
- Electronics and appliances
- Furniture and home goods
- Books and magazines
- Toys and sporting equipment
- Motor vehicles
- Prepared food and restaurant meals
- Alcoholic beverages (with additional taxes)
- Tobacco products (with additional taxes)
- Personal care items
Services are generally NOT taxed in Tennessee, which is an important distinction. If you hire a plumber, electrician, or accountant, you typically won’t pay sales tax on their labor. However, if they sell you materials or products as part of that service, those items may be taxed.
Digital products and services are a gray area that’s evolving. Some digital downloads and subscriptions may be subject to tax depending on the specific service and recent legislative changes. If you’re running a business involving digital goods, it’s worth checking with the Tennessee Department of Revenue for clarity.
Tax Exemptions and Exclusions
Tennessee does provide some relief through exemptions and exclusions. Organizations that qualify for tax-exempt status—primarily nonprofits, educational institutions, and religious organizations—can purchase items without paying sales tax by providing proper documentation.
Resale certificates are another important exemption. If you’re a business buying inventory to resell, you can present a resale certificate to avoid paying sales tax on your wholesale purchases. You’ll then collect sales tax from your customers when you sell those items.
Agricultural exemptions exist for certain farming equipment and supplies, though the rules can be specific. Farmers buying equipment for direct agricultural use may qualify for exemptions, but you’ll need to work with the Tennessee Department of Revenue to verify eligibility.
Manufacturing equipment purchased by manufacturers for direct use in production may also qualify for exemptions or reduced rates. This is designed to encourage manufacturing and industrial activity in the state.
Groceries and Food Items
Here’s good news: unprepared groceries are NOT subject to sales tax in Tennessee. This means your trip to the grocery store for milk, bread, vegetables, and other raw food items won’t be taxed. This is a significant benefit compared to some neighboring states.
The key word is “unprepared.” Once food is prepared, cooked, or ready-to-eat, it becomes taxable. So:
- Taxable: Restaurant meals, deli prepared foods, hot bar items, bakery items (prepared), candy, soft drinks
- Not taxed: Raw vegetables, uncooked meat, dairy products, bread from the bakery section, dried goods, frozen uncooked items
This distinction matters for your budget. Families buying groceries for home cooking get a break, while those eating out or buying convenience foods pay the full sales tax. It’s one reason why cooking at home is often more economical than dining out.
Some prepared foods sit in a gray area. For instance, a rotisserie chicken from the grocery store deli might be considered prepared food and taxed, while a raw chicken breast isn’t. When in doubt, ask the cashier or check your receipt—if it was taxed, it’ll show up separately.
Vehicle and Auto Sales Tax
Buying a car in Tennessee? You’ll pay sales tax on the purchase price. The rate depends on your county, but it’s the same combined rate that applies to other purchases in your area.
Here’s what you need to know: the sales tax on a vehicle is calculated on the full purchase price (or the fair market value if you’re trading in a vehicle). If you’re trading in a car, you don’t get to subtract the trade-in value from the taxable amount—you still pay tax on the full new vehicle price. Some states allow this deduction; Tennessee doesn’t.
If you’re considering buying a vehicle and want to understand the tax implications better, check out our guide on sales tax on a car in VA for a comparison of how other states handle vehicle taxation.
The tax is typically collected by the dealership at the time of purchase, and you’ll need to pay it before you can register your vehicle with the Tennessee Department of Motor Vehicles. Make sure to budget for this when calculating your total vehicle cost.
How Tennessee Compares to Neighbors
Tennessee’s sales tax is competitive with surrounding states, though each has its own quirks. Let’s see how Tennessee stacks up:
- Tennessee: 9.55% state rate (8.55%-9.75% combined with local)
- Georgia: 4% state rate (7%-10.4% combined with local)
- Kentucky: 6% state rate (6%-6% combined)
- Arkansas: 6.5% state rate (8.65%-9.65% combined)
- Mississippi: 7% state rate (7%-7.5% combined)
- Missouri: 4.225% state rate (8.45%-8.85% combined)
Tennessee’s state rate is among the highest in the region, but remember—Tennessee has no income tax. When you factor in that residents don’t pay state income tax on wages, Tennessee’s overall tax burden can actually be lower than states with lower sales taxes but higher income taxes.
For detailed comparisons, check out our guides on Mississippi sales tax and Missouri sales tax to see how other states structure their tax systems.
If you’re relocating to Tennessee from another state, understanding the sales tax difference is important for budgeting, but the lack of income tax often makes up for the higher consumption tax.
Tennessee Tax-Free Weekends
Tennessee doesn’t have an official annual statewide tax-free weekend like some neighboring states. However, some municipalities may offer occasional tax holidays for specific items or events.
For comparison, tax-free weekends in Alabama provide significant savings opportunities. While Tennessee doesn’t match this, it’s worth checking with your local city or county government to see if they’re planning any tax-free promotion periods.
Some special exemptions do exist for specific situations. For example, certain sales to the federal government or interstate commerce may be exempt. But for the average consumer, there’s no guaranteed tax-free shopping period in Tennessee.
How to Calculate Your Total Tax
Calculating your total sales tax in Tennessee is straightforward once you know your local rate. Here’s the formula:
Total Tax = Purchase Price × Sales Tax Rate (as a decimal)
Example: You’re buying a $100 item in Nashville (9.25% rate):
$100 × 0.0925 = $9.25 in sales tax
Total cost: $109.25
For larger purchases, this adds up quickly. A $500 purchase in Nashville means $46.25 in tax. A $5,000 vehicle purchase means $462.50 in tax.
When you’re budgeting for a purchase, always factor in your local sales tax rate. Many people forget to account for this when calculating whether they can afford something, then get surprised at checkout. Building this into your mental math prevents sticker shock.
If you need to compare the actual cost of items across different counties, remember to apply the appropriate local rate for each location. A $1,000 purchase might cost $1,092.50 in one county but $1,097.50 in another—small differences that matter on big buys.
Frequently Asked Questions
Is Tennessee sales tax the same everywhere in the state?
No. While Tennessee’s state rate is 9.55%, the combined rate varies by county and city. Your actual rate depends on where you’re shopping, ranging from about 8.55% to 9.75%. Check your receipt or the Tennessee Department of Revenue website for your specific area.
Do I pay sales tax on groceries in Tennessee?
Not on unprepared groceries. Raw food items like vegetables, meat, dairy, and bread are exempt. However, prepared foods, restaurant meals, and items like candy and soft drinks are taxed at the full rate.
Can I avoid sales tax by shopping online?
Not anymore. Following the Supreme Court’s 2018 South Dakota v. Wayfair decision, online retailers must collect and remit sales tax on purchases shipped to Tennessee, regardless of where the retailer is located. You’ll pay the same tax on online purchases as you would in-store.
What about sales tax on services?
Most services in Tennessee are not subject to sales tax. Labor from plumbers, electricians, accountants, and other service providers typically isn’t taxed. However, if they sell you materials or products, those items may be taxable.
How does Tennessee’s sales tax compare to income tax in other states?
Tennessee has no state income tax, which is a huge advantage. While its sales tax is higher than some neighboring states, residents save significantly on income taxes. For most people, this results in a lower overall tax burden compared to states with both income and sales taxes.
When do I need to pay sales tax on a vehicle?
When you purchase a vehicle in Tennessee, you pay sales tax at the point of sale, typically collected by the dealership. The tax is based on the full purchase price, not reduced by any trade-in value. You’ll need to pay this before registering your vehicle.
Are there any upcoming changes to Tennessee’s sales tax?
Tax laws can change, so it’s worth checking the Tennessee Department of Revenue website for the latest updates. As of 2024, the 9.55% state rate remains unchanged, but local rates and specific exemptions may be adjusted by municipalities.
