Tennessee Sales Tax
Tennessee Sales Tax At a Glance
State rate: 7%
Maximum combined rate: 9.75%
Sourcing: Origin
Tax Holidays: Back to School
Governing Body: Tennessee Department of Revenue
Streamlined Sales Tax Member: Yes
If you’re a retailer in Tennessee, or if you make online sales to customers who live there, then you’ll want to make yourself familiar with Tennessee sales tax law. All in-state retailers and many out-of-state sellers are now required to collect sales tax from their Tennessee customers, then file a sales tax return and remit that money to the Tennessee Department of Revenue. Read on to find out if you have Tennessee sales tax nexus, and how that affects your responsibilities as a retailer.
Tennessee Sales Tax Rates
Tennessee sales tax varies by location. There is a state sales tax of 7% and local tax imposed by city, county, or school districts, no higher than 2.75%. Groceries are taxed at 5% (some locations charge more), and some services have a different tax rate. The lowest total tax rate in Tennessee is 8.5%.
Tennessee’s state rate applies to an entire purchase. Local taxes apply only to the first $1600 of the sale price of a single item, and there is an additional state tax of 2.75% applied to the amount that is in excess of $1,600 but less than or equal to $3,200.
Tax Sourcing
Tennessee follows destination-based sales tax sourcing rules.
For Tennessee sellers, sales tax is generally based on the location where the customer receives the product or service. For remote sellers, this usually means the shipping address or delivery location determines the applicable sales tax rate.
For example, if a business located outside Tennessee ships a taxable product to a customer in Nashville, the seller generally collects the applicable Tennessee state and local sales tax rate based on the Nashville delivery location.
For more information about destination-based and origin-based sales tax rules, see AccurateTax’s guide to destination and origin sales tax.
Tennessee Nexus
A sales tax nexus is a legal way of stating that a small business has a significant enough presence within a state that the state can require them to collect and remit sales tax on behalf of their customers.
Physical Nexus
Physical nexus occurs when a business has a physical connection with Tennessee. A business may establish physical nexus through activities including:
- Maintaining an office, warehouse, or place of business in Tennessee
- Having employees, sales representatives, or other personnel working in Tennessee
- Owning or leasing property located in Tennessee
- Storing inventory in Tennessee
- Delivering products using company-owned vehicles
- Performing taxable services in Tennessee
Businesses that store inventory in third-party fulfillment centers may also create physical nexus. This includes inventory stored in Amazon fulfillment centers located in Tennessee or other third-party warehouses.
Economic Nexus
Tennessee requires remote sellers and marketplace sellers that exceed the state’s economic nexus threshold to register, collect, and remit Tennessee sales tax.
A remote seller generally establishes economic nexus in Tennessee when its sales into the state exceed:
- More than $100,000 in gross sales delivered into Tennessee during the previous 12-month period
Tennessee does not currently use a transaction-count threshold for economic nexus.
Businesses that exceed Tennessee’s economic nexus threshold should register with the Tennessee Department of Revenue and begin collecting Tennessee sales tax. Remote sellers can find additional guidance through the Tennessee Department of Revenue’s information for out-of-state sellers.
Marketplace Facilitators
If a marketplace facilitator has nexus in Tennessee, whether physical or economic, then they must collect and remit tax on behalf of the third-party sellers utilizing their platform.
What is Taxable in Tennessee
Tangible Goods
Tennessee sales tax applies to the sale of most goods, commonly known as tangible personal property (TPP). This includes property that can be seen, weighed, measured, felt, or touched. It also includes gas, steam, electric, water, and pre-written computer software. Custom-written software is taxable in certain situations as well.
Services
Most other services are not taxable, including (but not limited to): furniture moving, medical services, beauty services, carpentry, lawn care service, and others. There are no broad exemptions for food or clothing, but there are annual sales tax holidays for clothing, some food and food ingredients, and gun safety equipment.
Shipping and Handling
Generally, delivery charges (shippings, postage, handling, etc.) are included in the “sales price” and are taxable if the underlying sale is taxable.
- If the products sold are taxable, the shipping and handling charges are taxable because they are part of the total sales price.
- If the items are exempt sales, then the delivery charges are also exempt.
- Tennessee does not treat shipping and handling separately for taxability
Digital Goods and Services
Tennessee taxes certain digital products, including:
- Digital audio visual works (movies, videos)
- Digital audio works (music, sound recordings)
- Digital books
Exemptions
General Exemptions:
- Resale Exemptions: If a purchaser buys an item for the purpose of reselling them, they present a Resale Certificate and no tax is collected at purchase.
- Retailers automatically receive this certificate when they register with the Department.
- The seller must retain the certificate in their records.
Entity and Product Specific Exemptions:
- Some entities and products have statutory exemptions:
- Government entities
- Nonprofits (on purchases for own use that have the proper documentations)
- Agricultural and manufacturing purchases (with some exemptions)
For more details, please see Tennessee’s Sales and Use Tax Guide.
Sales Tax Holidays
Like certain other states, Tennessee also has a sales tax holiday that exempts the tax for clothing and school supplies that cost $100 or less and for computers and tablets that cost $1500 or less. The tax holiday fell on the last weekend of July 2021 (July 30-August 1). Additional sales tax holidays were implemented in 2021 for food and ingredients and gun safety equipment. Neither has been renewed yet for 2022.
Registration and Filing
All in-state retailers and out-of-state retailers who meet the economic nexus requirements must register for Tennessee sales and use tax. If your small business meets this threshold, you are required to register with the state of Tennessee to file and pay sales tax.
Below is the website to register and file taxes:
https://tntap.tn.gov/eservices/_
Registration for in-state tax filing is done through the department’s Tennessee Taxpayer Access Point (TNTAP). The website uses a wizard-based questionnaire to guide you through the process of registering. For out-of-state retailers who meet the requirements, you must also register to collect and remit Tennessee sales tax. This is also done through TNTAP.
Visit the Department of Revenue for:
Payees may only file and pay online. Payments may be done via:
- Credit cards, or
- ACH payments, either via taxpayer bank account or their 3rd party vendor, Global Payment Systems.
Note that taxpayers with a block or restriction on their account who use ACH must provide the information as required by the state.
Filing Your Tennessee Sales Tax Return
Tennessee requires all sales and use tax returns and payments to be filed and paid electronically. This is done through the Tennessee Taxpayer Access Point (TNTAP). First-time filers must register for an account to file their return and make payments. After that, filers log in with their username and password to file future taxes.
A helpful video about filing your sales and use tax return through TNTAP can be found here.
How do I file Tennessee sales and use tax returns?
The state of Tennessee requires that all business file their sales tax returns electronically. The Department of Revenue provides a sales and use tax online filing application on their website. Returns can also be filed using software by an approved software vendor.
Filing Frequencies and Deadlines
Tennessee requires businesses to file and pay sales tax monthly, quarterly, or annually. Your business’s estimated yearly income determines the frequency with which you must file. This will be determined when you apply for a sales tax account and should be listed on your exemption certificate.
The deadlines for filing sales tax in Tennessee are as follows:
- Monthly: No later than 20 days after filing period (20th of each month, or next available business day).
- Quarterly: No later than 20 days after filing period or next available business day. (January 20th, April 20th, July 20th, October 20th)
- Annual: January 20th or next available business day.
Monthly Filer Due Dates
| Period | Due Date |
|---|---|
| January | February 20 |
| February | March 20 |
| March | April 20 |
| April | May 20 |
| May | June 20 |
| June | July 20 |
| July | August 20 |
| August | September 20 |
| September | October 20 |
| October | November 20 |
| November | December 20 |
| December | January 20 |
Quarterly Filer Due Dates
| Period | Due Date |
|---|---|
| January – March (Q1) | April 20 |
| April – June (Q2) | July 20 |
| July – September (Q3) | October 20 |
| October – December (Q4) | January 20 |
Annual Filer Due Dates
| Period | Due Date |
|---|---|
| January – December | January 20 of the following year |
If any of the above dates fall on holiday or weekend, the deadline is extended until the next business day.
Penalties and Interest
Failure to file returns or pay sales tax on time results in statutory assessments under Tenn. Code Ann. § 67-1-801:
- Late Filing / Payment Penalty: Assessed at 5% of the unpaid tax due per month (or fraction thereof) up to a maximum penalty of 25% (minimum penalty of $15).
- Interest: Statutory interest accrues on all delinquent or unpaid tax balances. The official TDOR interest rate is evaluated annually.
Can I get my penalty waived?
The TN Department of Revenue does allow the penalty to be waived if there is a “good and reasonable cause” for the delay. One example is that the payer has had no previous payment problems over the last two years. If you think you qualify, sign in to your TNTAP account and follow the link for “Petition for Penalty Waiver”.
Resources:
Tennessee Sales Tax Software
While calculating sales tax in Tennessee is easier than in many destination-based states, retailers may find that sales tax software helps them streamline the process and avoid the kinds of mistakes that lead to audits. Our TaxTools software is the answer. It pinpoints the right sales tax for every US address, and applies the appropriate sales tax to each order placed on your site. Then when you’re ready to file your return, our reports make the process simple. Configuring sales tax on your ecommerce store has never been easier. Contact us for more information or register for a free trial of AccurateTax’s TaxTools software.
You can also use our free sales tax calculator to look up the rate for any Tennessee address.
Last updated June 2026