Yes, Tennessee has a state sales tax, and it’s one of the highest in the country. The state charges 7% on most retail purchases, and local counties and cities add their own tax on top, bringing the combined rate at the register to roughly 8.5% to 9.75% depending on where you shop.1Tennessee Department of Revenue. Sales and Use Tax Only California has a higher state-level rate.
The 7% State Rate
Tennessee’s base rate of 7% applies to the retail price of tangible personal property and certain services, and it’s the same flat figure in every county.2FindLaw. Tennessee Code 67-6-202 Five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) have no sales tax at all, and every other state with a sales tax sits below Tennessee’s rate.
The reason the rate runs so high is that Tennessee has no state income tax on wages or salaries. Sales tax is the state’s single largest revenue source, covering roughly 60% of all tax collections. Tennessee residents pay more at the cash register in exchange for keeping their full paycheck.
Local Sales Tax on Top
Every county and most cities in Tennessee add a local sales tax to the 7% state rate. Local governments can set their rate up to a maximum of 2.75%, and most jurisdictions charge somewhere between 2.25% and 2.75%, which is why combined rates in the 9% to 9.75% range are typical.3Justia. Tennessee Code 67-6-702 – Tax Authorized – Rates – Termination of Services Tax The local tax covers the same purchases as the state tax and is layered on top of all other county and city taxes.4Justia. Tennessee Code 67-6-701 – Short Title – Nature of Tax
To find the exact combined rate for a specific address, use the lookup tool on the Tennessee Department of Revenue’s website.
The Single Article Tax Cap
Expensive items get a built-in break. The full 7% state rate only applies to the first $1,600 of a single item’s price. For the portion between $1,600 and $3,200, the state rate drops to 2.75%. Anything above $3,200 owes no additional state sales tax.5Tennessee Department of Revenue. Single Article Special Tax Rates Local sales tax also caps out at the first $1,600 per item in most jurisdictions.
The cap works per item, not per invoice. Three $2,000 appliances rung up on one receipt get three separate cap calculations. On a $40,000 car, the state portion of the tax tops out at $156 (7% on the first $1,600 plus 2.75% on the next $1,600), rather than the $2,800 you’d owe if the full rate applied to the whole price.2FindLaw. Tennessee Code 67-6-202 The cap matters most for vehicles, furniture, jewelry, and other big-ticket purchases.
Groceries Are Taxed, But at a Lower Rate
Grocery food and food ingredients are not exempt in Tennessee, but the state rate on them is 4% instead of 7%.6Tennessee Department of Revenue. Due Dates and Tax Rates Local sales tax still applies at the full local rate, so total tax on groceries runs roughly 6.25% to 6.75% in most areas.7Tennessee Department of Revenue. SUT-53 – Food and Food Ingredients – Definition and Tax Rate
The reduced rate covers food meant for home preparation and consumption. Prepared meals, restaurant food, vending machine items, candy, and dietary supplements all get taxed at the standard 7% state rate, even when sold at a grocery store.
What’s Taxed and What’s Exempt
Sales tax applies broadly to tangible personal property sold at retail: clothing, electronics, furniture, household goods, building materials, and so on. Tennessee also taxes a defined list of services. The list is narrower than in some other states but catches several categories people run into regularly.8Tennessee Department of Revenue. SUT-115 – Services Subject to Sales and Use Tax Short-term lodging (hotels, vacation rentals under 90 days), paid parking, repairs to tangible property, laundry and dry cleaning, installation, telecommunications, and cable or satellite television are all taxable. Services not on the list are generally exempt unless bundled into the sale of a taxable product. Delivery charges and labor needed to complete a taxable sale are treated as part of the sale price and taxed with it.
Digital downloads such as e-books, audiobooks, music, and movies are taxed at the full 7% state rate plus a standard 2.5% local rate, and subscription streaming services fall under the same rule.9Tennessee Department of Revenue. Sales Tax on Specified Digital Products Digital newspapers, digital magazines, individual photographs, and video games are excluded from the taxable “specified digital products” category.
Common Exemptions
Several categories of goods are exempt from sales tax entirely:
- Prescription drugs for human use, including over-the-counter medications when a doctor writes a prescription for them. Insulin and medical oxygen dispensed by prescription are also exempt.10Justia. Tennessee Code 67-6-320 – Prescription Drugs
- Durable medical equipment prescribed for home use, plus repair services to maintain it.11Justia. Tennessee Code 67-6-314 – Medical Equipment and Devices
- Items bought for resale by a business holding a resale certificate; tax gets collected at the final sale to the consumer.
- Purchases by qualifying nonprofits for their own use, though nonprofits still have to collect sales tax on what they sell.12Tennessee Department of Revenue. SUT-78 – Nonprofit Organizations Making Sales of Taxable Products or Services
- Qualifying agricultural supplies (seeds, fertilizer, pesticides, livestock feed, farm fuel, equipment used primarily in agriculture), but only for buyers with a current Agricultural Sales and Use Tax Certificate of Exemption, which expires every four years.13Tennessee Department of Revenue. Agricultural Exemption
Online and Out-of-State Purchases
Online purchases are taxable too, in most cases. Since October 2020, marketplace facilitators (platforms like Amazon) that make or facilitate more than $100,000 in sales to Tennessee customers in any 12-month period must collect and remit Tennessee sales tax on those transactions.14Tennessee Department of Revenue. Out of State Dealers Marketplace Facilitators The threshold is low enough that virtually every major online marketplace collects Tennessee tax.
Out-of-state sellers that don’t use a marketplace face the same $100,000 threshold. Once they cross it, they must register with the Department of Revenue and start collecting Tennessee sales tax. The $100,000 figure covers all retail sales to Tennessee customers, including exempt sales, but not sales for resale.
Use Tax When No Sales Tax Was Collected
If a seller doesn’t collect Tennessee sales tax on a taxable purchase, the buyer owes use tax at the same rate the sales tax would have been.1Tennessee Department of Revenue. Sales and Use Tax This comes up most often with purchases from smaller out-of-state retailers below the $100,000 threshold, or with items bought while traveling in states with lower tax rates and brought home.
Individuals can report and pay use tax through the Tennessee Taxpayer Access Point (TNTAP), the state’s online tax portal. Enforcement against individual consumers is light, but technically every untaxed taxable purchase brought into Tennessee creates a use tax obligation.
The Annual Sales Tax Holiday
Tennessee holds a sales tax holiday each summer, typically during the last weekend in July. Over the holiday weekend, shoppers pay no state or local sales tax on clothing and school supplies priced at $100 or less per item, or on computers priced at $1,500 or less.15Tennessee Department of Revenue. Annual Sales Tax Holiday Happening July 25 – July 27 The 2025 holiday ran from Friday, July 25 through Sunday, July 27. The Department of Revenue announces specific dates for each year.
The per-item price caps are hard limits. A $99 backpack qualifies; a $101 jacket does not, and the discount isn’t prorated, so items even slightly over the cap owe the full tax on their entire price.