Tennessee Sales Tax Basics

Tennessee has a statewide sales tax rate of 9.55%, which is one of the highest in the country. This rate combines the state sales tax of 9.55% — there is no separate state rate you add on top. However, the actual tax you pay at checkout varies by county and city, because many Tennessee counties and municipalities add their own local sales taxes on top of the state rate.

When you buy something in Tennessee, the seller collects sales tax at the point of sale and sends it to the state. You do not file a separate form or pay it later — it is included in the total price you see on your receipt. The tax applies to most goods, but not all purchases are taxed the same way.

Key Takeaways

  • Tennessee's statewide sales tax is 9.55%, but your actual tax rate depends on which county and city you are in, because local taxes stack on top.
  • Sales tax is collected by the seller at checkout and included in your final price — you do not pay it separately.
  • Groceries, prescription medications, and medical equipment are generally not subject to sales tax in Tennessee.
  • Online purchases from out-of-state sellers are subject to Tennessee sales tax if the seller has a physical presence in the state or meets federal nexus rules.
  • The tax rate you pay can range from 9.55% to over 10% depending on local additions in your area.

How Local Taxes Change Your Rate

The 9.55% statewide rate is a floor, not a ceiling. Counties can add their own sales tax, and cities within those counties can add even more. For example, Davidson County (Nashville) adds 2.25% on top of the state rate, bringing the total to 11.8% in some Nashville locations. Shelby County (Memphis) adds 2.25% as well. Other counties add smaller amounts, ranging from 0.25% to 2.75%.

Your exact rate depends on where the sale happens. If you buy something in one city, you pay that city's rate. If you cross into another city in the same county, the rate may change. This is why two purchases on the same day in Tennessee can have different tax amounts — location matters. You can find your specific county and city rate by searching the Tennessee Department of Revenue website or asking the cashier.

What Is and Is Not Taxed

Most tangible goods — clothing, electronics, furniture, household items — are subject to sales tax. However, Tennessee exempts certain purchases from tax:

  • Groceries and food for home consumption (but not prepared food, restaurant meals, or candy)
  • Prescription medications and certain medical devices
  • Utilities like electricity and natural gas (though these have their own separate tax)
  • Some agricultural equipment and supplies

Services are generally not taxed in Tennessee, with some exceptions. For example, you do not pay sales tax on haircuts, car repairs, or plumbing work. However, if you buy a product as part of that service — like paint at a hardware store or parts for a repair — those items are taxed. The line between a service and a taxable product can be unclear, so if you are unsure, ask the business before you pay.

Sales Tax on Online and Out-of-State Purchases

If you order something online from a company with no physical location in Tennessee, you may not see sales tax added at checkout. However, Tennessee law requires you to pay sales tax on those purchases anyway. This is called use tax, and it applies to items you bring into Tennessee or have delivered here, even if you bought them out of state.

In practice, most large online retailers (Amazon, Walmart, Target) now collect Tennessee sales tax automatically because they have warehouses or other operations in the state. Smaller sellers or out-of-state businesses may not. If you do not see tax added, you are technically responsible for reporting and paying it yourself on your state income tax return, though few individuals do. The Tennessee Department of Revenue focuses enforcement on businesses rather than individual shoppers.

Who Collects and Where the Money Goes

The seller — the store, restaurant, or online retailer — is responsible for collecting sales tax from you and sending it to the state. Businesses file sales tax returns monthly or quarterly, depending on how much tax they collect. The money goes into the state treasury and is distributed to state and local governments based on formulas set by Tennessee law.

Counties and cities use their portion of sales tax revenue to fund schools, roads, police, and other services. This is why the rate varies by location — each area sets its own rate to fund its own needs. When you see a higher tax rate in one city than another, you are seeing the result of different local funding decisions.

Special Situations and Exemptions

Certain organizations and purchases have special tax treatment. Nonprofits and religious organizations can sometimes obtain a sales tax exemption certificate, which allows them to buy goods without paying tax if those goods are used for the organization's mission. Resellers — businesses that buy goods to resell them — do not pay sales tax on their purchases if they provide a resale certificate to the seller.

If you are a business owner or operate as a sole proprietor, you may be able to buy certain items without sales tax if they are used directly in your business. However, the rules are specific, and what qualifies depends on your type of business. If you think you may may have access to for an exemption, contact the Tennessee Department of Revenue or consult a tax professional.

Frequently Asked Questions

What is the difference between sales tax and use tax?

Sales tax is collected by the seller when you buy something in Tennessee. Use tax is a tax you owe on items you buy outside Tennessee and bring into the state, or on out-of-state purchases delivered to you. They are the same rate, but use tax is your responsibility to report and pay if the seller did not collect it.

Do I pay sales tax on groceries in Tennessee?

No, groceries for home consumption are not taxed. This includes bread, milk, vegetables, and other food you cook at home. However, prepared foods, restaurant meals, candy, and soft drinks are taxed. If you are unsure whether something counts as a grocery, the cashier can tell you before you check out.

Why is my sales tax rate different from my neighbor's?

Your neighbor may live in a different city or county, each of which can add its own local sales tax on top of the state rate. Even within the same county, different cities may have different rates. Check your receipt to see the exact rate charged, or search the Tennessee Department of Revenue website for your specific location.

Do I have to pay sales tax if I buy something online from out of state?

Yes, you owe Tennessee use tax on out-of-state purchases. However, most large retailers now collect this tax automatically. If the seller did not collect it, you are responsible for reporting it on your state tax return, though enforcement focuses on businesses rather than individuals.

Are there any items that are always tax-free in Tennessee?

Prescription medications and certain medical devices are always tax-free. Groceries for home consumption are also always tax-free. Most other items are taxed, though the rate varies by location. Services like haircuts and repairs are generally not taxed, but any products sold as part of that service are.