Tennessee Agricultural Tax Exemption: Who Qualifies and How to Apply

The Tennessee agricultural tax exemption lets qualified farmers, nursery operators, and timber harvesters buy equipment, supplies, building materials, repair parts and labor, and fuel without paying the state’s 7% sales tax, as long as the items are used primarily in agricultural operations.¹ You apply once to the Department of Revenue, receive a certificate that lasts four years, and present it to sellers at the point of purchase.

Who Qualifies

Tennessee Code 67-6-207 defines a “qualified farmer or nurseryman” through several alternative paths. You only need to meet one.

The most common path is income-based: you own or lease agricultural land that produced and sold at least $1,500 in agricultural products during the year, including any government payments.¹

If you don’t clear $1,500, you can still qualify through your federal return. Filing a Schedule F (Profit or Loss from Farming), a Form 4835 (Farm Rental Income and Expenses), or a Schedule E showing farm rental activity all count.¹ That route works for newer operations and for landowners leasing farmland to tenants.

Two other categories are easy to overlook. Anyone providing for-hire custom agricultural services — plowing, planting, harvesting, or processing crops for other farmers on contract — qualifies. And land enrolled in the Agricultural, Forest, and Open Space Land Act of 1976 (Tennessee’s “greenbelt” program) satisfies the eligibility test on its own.¹ If none of these fit, the Commissioner of Revenue has discretion to approve applicants who can otherwise show they’re genuinely in the business of raising, harvesting, or producing agricultural commodities.

Timber harvesters fall under the same statute. The Department looks for evidence that you’re actively harvesting timber for sale or further manufacturing, not clearing land for development.

What You Can Buy Tax-Free

The exemption covers any tangible personal property primarily used in your agricultural operations, including machinery, equipment, building materials, repair parts and labor, warranties, and software.¹ The scope is deliberately broad.²

Common exempt purchases include:

Tractors, combines, plows, irrigation systems, and other equipment used on the land.²
Seeds, seedlings, fertilizer, and pesticides.²
Livestock feed, medications, and reproductive materials like semen or embryos.²
Lumber, fencing, and other building materials for structures like barns or livestock enclosures, when primarily for agricultural use.
Replacement parts and labor to repair qualified farm equipment, when billed to a certificate holder.²
Gasoline and diesel used in agricultural operations.³

The exemption applies whether you buy from a Tennessee retailer or an out-of-state vendor shipping into the state, and it covers leased and rented equipment, not only purchases.

The 50 Percent Use Rule

If a piece of property has both farm and non-farm uses, it qualifies for the exemption only when more than 50% of its actual use is for agricultural operations.² Personal use and recreation don’t count. A tractor you use to hay fields most weekdays and mow your lawn on weekends is fine. A side-by-side you mostly ride for deer hunting and occasionally use to check fence lines isn’t.

The Department doesn’t ask you to log every hour. But under audit, you’ll need to explain how you determined the property was primarily for farming. Ask yourself that question at the register: if the item won’t spend most of its working life on agricultural tasks, don’t buy it on the certificate.

How to Apply

The application is Form F1308401, “Application for Agricultural Sales and Use Tax Exemption.”⁴ You can submit it online through the Tennessee Taxpayer Access Point (TNTAP) without creating an account. From the TNTAP homepage, click “View Exemption Links,” then “Apply for Sales & Use Tax Exemption.”⁵

The form asks for your legal name, the physical address of the farm or business location, and either a Social Security Number or Federal Employer Identification Number. Attach documentation for at least one eligibility path: a copy of your federal return showing Schedule F or Form 4835 activity, proof of $1,500 or more in agricultural sales, or evidence of greenbelt enrollment. Missing information is the most common reason for processing delays, so fill every field.

Using the Certificate at the Register

Once approved, present the certificate (or a copy) to sellers when you make a tax-exempt purchase. Sellers are required to keep a copy on file along with your name, address, and a description of the tax-exempt items on each invoice.³ You don’t need to show it for every bag of feed after the first visit, but the vendor must have one on file the first time you claim the exemption with them. A retailer can refuse to honor a certificate or ask for additional verification; the seller faces liability if they accept an invalid one.

How Long the Certificate Lasts

Agricultural exemption certificates last four years. The prior cycle expired December 31, 2023, so current certificates run through December 31, 2027.⁶

Renewal is not automatic. The Department contacts certificate holders and requires them to verify they still qualify, and a renewed certificate is mailed only after that verification is complete.³ If you don’t respond, or you no longer meet the eligibility criteria, the certificate lapses and purchases after the expiration date are fully taxable at the standard 7% rate.⁷ Keep the Department’s mailing address current; a renewal notice sent to an old address won’t extend your deadline.

Records to Keep

Both buyers and sellers must document every tax-exempt transaction. Sellers hold a copy of your certificate and log your name, address, and a description of the exempt items on each invoice. On your side, keep purchase receipts, invoices, and any records showing the items were used primarily for farming.³ Tennessee doesn’t set an exact retention period, but the Department advises keeping documents at least through the exemption period and retaining expired certificates to support past transactions.

Penalties for Misuse

Using the certificate on personal purchases is the fastest way to lose it. The statute is direct: any misrepresentation on the application makes you liable for the full unpaid tax plus penalty and interest.¹ The Department can also revoke the certificate outright, killing the exemption on all future purchases, not just the misused ones.

Common triggers include buying a personal vehicle or household appliance on the certificate, letting a friend or family member use it for their own purchases, and claiming items that clearly fail the 50% test. Vendors’ records create a paper trail, and the Department does audit certificate holders. The tax avoided, interest on that amount, and an added penalty are all on the table, so the risk far outweighs the 7% saved on a personal purchase.

Selling Your Farm Products Is a Separate Exemption

Tennessee also exempts the proceeds from selling farm products, but under a different statute, T.C.A. § 67-6-301. If you grew or produced at least 50% of what you’re selling, the revenue from those direct sales is exempt from sales tax; if less than half was your own production, only the portion you actually grew or raised qualifies.⁸ That’s the sales side of the equation, separate from the purchase-side exemption under § 67-6-207. Qualifying for one doesn’t automatically mean you qualify for the other.

1
Justia Law. Tennessee Code 67-6-207 – Property Sold to Farmer or Nurseryman
2
Tennessee Department of Revenue. Tennessee Tax Manual for Farmers, Nursery Operators, and Timber Harvesters
3
Tennessee Department of Revenue. Agricultural Exemption
4
Tennessee Department of Revenue. Application for Agricultural Sales and Use Tax Exemption
5
Tennessee Department of Revenue. Exemptions Certificates Credits
6
Tennessee Department of Revenue. SUT-142 – Agricultural Exemption – Certificate Renewals
7
Tennessee Department of Revenue. Due Dates and Tax Rates
8
FindLaw. Tennessee Code 67-6-301