The sales tax rate in Germantown, TN is 9.75% on most purchases. That’s 7% in Tennessee state tax plus 2.75% in local tax, which combines Shelby County’s 2.25% rate with Germantown’s own 0.50% city rate. Groceries are taxed at a lower combined rate, and the local portion is capped on expensive single items.
How the Rate Breaks Down
Tennessee applies its 7% state sales tax to the full price of every taxable item.1Justia. Tennessee Code 67-6-202 – Property Sold at Retail Local governments can add up to 2.75% on top of that, but only on the first $1,600 of any single item of tangible personal property.2Justia. Tennessee Code 67-6-702 – Tax Authorized Germantown reaches the full local maximum: 2.25% from Shelby County and 0.50% from the city.
For anything that costs less than $1,600, you pay 9.75% at the register. No math required.
What You Pay on Items Over $1,600
Once a single item crosses $1,600, the rules shift. Local tax stops at that price point, so no county or city tax applies to the portion above $1,600.1Justia. Tennessee Code 67-6-202 – Property Sold at Retail The state then charges a separate 2.75% single article tax on the slice between $1,600.01 and $3,200.3Tennessee Department of Revenue. Single Article and Special Tax Rates Anything above $3,200 is only taxed at the 7% state rate.
On a $5,000 piece of furniture, that works out to:
- First $1,600: 7% state + 2.75% local = $156
- $1,600.01 to $3,200: 7% state + 2.75% state single article tax = $156
- $3,200.01 to $5,000: 7% state only = $126
- Total: $438, an effective rate of about 8.76%
The maximum local tax on any single item is $44 (2.75% of $1,600). “Single article” means one independent item as commonly understood, not an invoice total. Buying ten $500 items on one receipt does not trigger the cap, because each item is priced below $1,600 on its own.3Tennessee Department of Revenue. Single Article and Special Tax Rates One exception worth knowing: dealer-installed accessories on vehicles and boats get rolled into the single article price for cap purposes.
Grocery Rate
Groceries get a meaningful break. Tennessee taxes food and food ingredients for home consumption at 4% rather than 7%.4Justia. Tennessee Code 67-6-228 – Food Retail Sales Tax Add the 2.75% local tax and the combined grocery rate in Germantown is 6.75%. Produce, dairy, bread, canned goods, and other unprepared items you take home to cook or store all qualify.
Prepared food does not. Anything heated for sale, sold with utensils, or sold as a ready-to-eat meal is taxed at the full 9.75%.4Justia. Tennessee Code 67-6-228 – Food Retail Sales Tax At a grocery store with a deli, the rotisserie chicken rings up at 9.75% while the raw chicken next to it rings up at 6.75%. Candy, dietary supplements, and alcoholic beverages also get the full rate even when sold alongside groceries.
Food paid for with SNAP benefits is exempt from both state and local sales tax under federal law.5U.S. Department of Agriculture. SNAP Retailer Notice – Sales Tax, Fees, and Refunds
What’s Exempt
A handful of common purchases carry no sales tax at all:
- Prescription drugs, including insulin and medical oxygen, are exempt. Over-the-counter medications bought without a prescription are taxable.6Justia. Tennessee Code 67-6-320 – Prescription Drugs
- Farmers and nursery operators with a valid Agricultural Sales and Use Tax Certificate of Exemption can buy equipment, fuel, seeds, fertilizer, and livestock feed tax-free when used primarily in agricultural operations.7Tennessee Department of Revenue. Agricultural Exemption
- Nonprofits and government entities with a valid Tennessee exemption certificate can make qualifying purchases tax-free.8Tennessee Department of Revenue. Exemptions Certificates Credits
Online and Out-of-State Purchases
Online shopping doesn’t avoid the 9.75% rate. Out-of-state retailers with $100,000 or more in sales to Tennessee customers over any 12-month period must register and collect Tennessee sales tax, and marketplace facilitators like Amazon, eBay, and Etsy carry the same obligation on sales made through their platforms.9Tennessee Department of Revenue. Out of State Dealers Marketplace Facilitators For most online purchases, the tax is already added at checkout.
When a seller doesn’t collect Tennessee tax, the obligation shifts to you as use tax, charged at the same 9.75% rate. It applies to furniture bought from a company that doesn’t charge Tennessee tax, supplies ordered from an out-of-state vendor, or purchases brought back from a lower-tax state.10Tennessee Department of Revenue. Consumer Use Tax Individuals can file and pay through the Tennessee Taxpayer Access Point (TNTAP) online portal.11Tennessee Department of Revenue. CUT-1 – How to Pay Consumer Use Tax
Services and Digital Products That Get Taxed
Tennessee taxes several things that aren’t physical goods. Repair and installation labor on tangible personal property, car repairs, lawnmower service, appliance work, is taxable on the full bill, labor included. Labor on real property such as your house or HVAC system is not.12Tennessee Department of Revenue. SUT-22 – Sales Price – Charges for Labor Monthly charges for mobile phones, landlines, cable TV, broadband TV programming, and satellite service are all taxable.13Tennessee Department of Revenue. Television and Telecommunications Tax So are hotel stays and other lodging under 90 consecutive days, with any applicable local occupancy tax on top.14Tennessee Department of Revenue. Short-Term Rentals – Reporting Requirements
Digital products also fall under sales tax. Streaming subscriptions, downloaded music, e-books, and other “specified digital products” carry the 7% state rate plus a flat 2.5% local rate, for a combined 9.5% in most cases.15Tennessee Department of Revenue. Sales Tax on Specified Digital Products Electronically delivered computer software is taxable under a separate provision. Digital newspapers, digital magazines, video games, satellite radio, and individual digital photographs are not classified as specified digital products and escape this tax.
Annual Sales Tax Holiday
Tennessee runs a sales tax holiday each summer, typically the last full weekend in July. In 2025, the holiday ran July 25–27 and covered clothing at $100 or less per item, school and art supplies at $100 or less per item, and computers, laptops, and tablets at $1,500 or less per item. Qualifying purchases are free of both state and local sales tax during the holiday. The Tennessee Department of Revenue publishes the current year’s dates and item limits ahead of each holiday.