How Tennessee Sales Tax Works and What You Pay

Tennessee's sales tax rate and what it covers

Tennessee has a state sales tax of 4.55%, which applies to most goods you buy at retail. When you make a purchase, this state rate is added to your bill at checkout. However, the total tax you pay is almost always higher than 4.55% because counties and cities in Tennessee add their own local sales taxes on top of the state rate.

The combined rate — state plus local — ranges from about 8.55% to 9.55% depending on where you live. For example, if you shop in Nashville (Davidson County), you pay 9.55% total. If you shop in Memphis (Shelby County), you pay 9.55% total. A county with lower local rates might charge 8.55% combined. The exact rate for your location depends on which county and city you're in.

Sales tax in Tennessee applies to tangible goods — things you can touch and take home. This includes clothing, groceries, electronics, furniture, and most other retail purchases. Some items are taxed differently or not taxed at all, which is covered in later sections.

Key Takeaways

• Tennessee's state sales tax is 4.55%, but your total tax rate includes county and city taxes, bringing it to between 8.55% and 9.55% depending on your location.
• Sales tax applies to most tangible goods at the point of sale and is added to your bill at checkout.
• Groceries and prescription medications are not subject to sales tax in Tennessee, though prepared foods are taxed.
• Services like haircuts, repairs, and professional fees are generally not taxed, but labor charges tied to goods sometimes are.
• Online purchases from out-of-state sellers may or may not have Tennessee sales tax collected, depending on the seller's policies and nexus in the state.

What items are exempt from Tennessee sales tax

Groceries — unprepared food you buy to cook at home — are not subject to sales tax in Tennessee. This includes items like milk, bread, vegetables, meat, and canned goods. The key word is "unprepared." If you buy a rotisserie chicken from the grocery store deli, that is a prepared food and is taxed. If you buy a raw chicken to cook at home, it is not taxed.

Prescription medications are also exempt from sales tax. You do not pay tax when you fill a prescription at a pharmacy. Over-the-counter medications like aspirin or cold medicine are taxed, however, because they are not prescribed by a doctor.

Clothing and footwear have no sales tax in Tennessee. This applies to everyday wear — shirts, pants, shoes, socks, hats, and coats. It does not explore to accessories like belts, ties, or jewelry, which are taxed. Items that are primarily protective equipment for work or sports, rather than clothing, may be taxed.

How sales tax works on services

Most services are not subject to sales tax in Tennessee. If you get a haircut, the barber or stylist does not charge you sales tax. If you hire a plumber to fix a leak, you do not pay sales tax on the labor. Professional services like accounting, legal information, or medical care are not taxed.

The line gets blurry when a service involves selling you a tangible good as part of the work. If a mechanic replaces your car's oil and filter, the labor is not taxed, but the oil and filter themselves are taxed. If a contractor builds you a deck, the labor is not taxed, but the lumber and materials are taxed. The seller should itemize the bill so you can see what is taxed and what is not.

Repair services follow the same rule. Repairing shoes, watches, or appliances is not taxed. The parts used in the repair are taxed. Again, a clear invoice should show the breakdown.

Sales tax on online and out-of-state purchases

When you buy something online from a large retailer like Amazon, Walmart, or Target, Tennessee sales tax is usually collected at checkout if the seller has a physical presence or significant business operations in Tennessee. These companies collect and send the tax to the state.

When you buy from a small out-of-state seller with no Tennessee location, that seller may not collect Tennessee sales tax. In that case, Tennessee law says you owe "use tax" — a tax on items you bring into the state for use here. In practice, most individuals do not pay use tax because there is no enforcement mechanism at checkout. However, the legal obligation exists.

If you are a business owner buying inventory or materials, you should track out-of-state purchases and report use tax on your state return. Individual consumers should be aware that use tax exists but understand it is rarely collected on small personal purchases.

How to find your local sales tax rate

Your total sales tax rate depends on your county and city. Tennessee's Department of Revenue publishes a list of all county and city rates on its website. You can search by county name to find the combined rate for your area.

If you live in a city, you pay both the county rate and the city rate. If you live outside city limits, you pay only the county rate. For example, someone in Nashville proper pays Nashville's city rate plus Davidson County's rate. Someone in an unincorporated area of Davidson County pays only the county rate.

Rates can change, though not frequently. If you need the current rate for your location, the Department of Revenue website is the official source. Retailers are required to post their total tax rate at the register or on their receipt.

Sales tax on specific categories

Vehicles are subject to sales tax in Tennessee when you purchase them. The tax is calculated on the purchase price and is typically collected at the time of sale by the dealer or private seller. If you trade in a vehicle, the tax is usually applied to the net price after the trade-in credit.

Alcohol and tobacco products are taxed at the regular sales tax rate, plus they may be subject to additional state excise taxes. Beer, wine, and spirits all have sales tax applied. Cigarettes and smokeless tobacco also have sales tax applied on top of state excise taxes.

Gasoline is taxed at the pump, but the tax you see is an excise tax, not a sales tax. It is a separate tax per gallon set by the state and is not the same as the sales tax rate in your county.

Frequently Asked Questions

Do I pay sales tax on groceries in Tennessee?

No, unprepared groceries are not taxed. This includes raw meat, produce, bread, milk, and canned goods. Prepared foods like deli items, rotisserie chicken, and hot foods from the grocery store are taxed. Alcohol and tobacco are also taxed even though they may be sold in the grocery store.

What is the difference between sales tax and use tax?

Sales tax is collected by the seller at the point of sale. Use tax is a tax you owe on items you bring into Tennessee from out of state if the seller did not collect sales tax. It is the same rate as sales tax but is your responsibility to report and pay, which rarely happens for individual consumers.

Why is my sales tax different from the state rate of 4.55%?

Tennessee's state rate is 4.55%, but every county and most cities add their own local sales tax on top of it. Your total rate is the combination of state, county, and city taxes. This is why the rate varies by location and is always higher than 4.55%.

Do I pay sales tax on clothing?

No, clothing and footwear are exempt from sales tax in Tennessee. This includes shirts, pants, shoes, socks, hats, and coats. Accessories like belts, ties, and jewelry are taxed because they are not considered clothing.

Is labor taxed in Tennessee?

No, labor and services are generally not taxed. A haircut, plumbing repair, or legal consultation are not subject to sales tax. However, materials and parts used in the service are taxed. Your invoice should show what is taxed and what is not.