Yes, Tennessee has a sales tax, and it applies to most purchases
Tennessee charges a state sales tax of 9.55% on most goods and services you buy. This is one of the highest state sales tax rates in the country. The rate breaks down as 4% state tax plus 5.55% local tax, though the local portion varies slightly by county and city — some areas charge a bit less, others a bit more.
When you buy something at a store or online, the sales tax is added at checkout. The seller collects it and sends it to the state and local tax authorities. You don't file anything yourself for sales tax — it's handled automatically at the point of sale.
Tennessee has no state income tax, which is why the state relies more heavily on sales tax than many other states do. This means the sales tax you pay is a bigger part of the state's revenue.
Key Takeaways
- Tennessee's state sales tax is 4%, but your total rate is usually 9.55% when you add the local tax for your county or city.
- Sales tax applies to most physical goods, groceries, and many services, but some items like prescription medications and certain medical equipment are exempt.
- The local portion of the tax varies by location, so the exact rate you pay depends on where you live or where you make the purchase.
- Online purchases are subject to Tennessee sales tax if the seller has a physical presence in the state or meets certain sales thresholds.
What the 9.55% rate actually includes
The 9.55% you see on your receipt is the combination of state and local tax. The state portion is always 4%, but your county and city add their own local sales tax on top of that. In Nashville-Davidson, for example, the local rate is 9.25% total (4% state plus 5.25% local). In Memphis, it's 9.55% total. Rural counties may have slightly lower combined rates.
When you shop online or travel to another county, the tax rate that applies is the one where the purchase happens or where the item is delivered. If you order something online to be shipped to your home address in Tennessee, the seller should charge the sales tax rate for your delivery location.
Which items are taxed and which are exempt
Most things you buy are subject to sales tax in Tennessee. Clothing, electronics, furniture, and restaurant meals all get taxed. Groceries — unprepared food you buy to cook at home — are taxed at a lower rate of 4% (state tax only, no local tax added). This is one of the few breaks Tennessee gives on everyday purchases.
Some items are completely exempt from sales tax. Prescription medications and certain medical devices like wheelchairs and hearing aids don't get taxed. Items sold for resale by a business (wholesale goods) are also exempt if the buyer has a resale certificate. Nonprofit organizations may be exempt in some cases, though this varies by the type of organization and purchase.
Services are taxed differently depending on what they are. Haircuts, repairs, and professional services like accounting are generally taxed. However, some services — like certain medical services — may not be.
How online purchases are handled
If you order something online from a company that has a warehouse, office, or other physical location in Tennessee, that company must charge you Tennessee sales tax. The same rule applies if the seller meets certain sales thresholds in the state — currently, sellers who have more than $100,000 in sales to Tennessee customers in a year must collect sales tax.
The seller is responsible for charging the correct rate for your delivery address and sending that tax to Tennessee. You don't need to track this yourself or report it on any form. If a seller fails to charge tax when they should have, that's the seller's problem, not yours.
If you buy from a seller outside Tennessee who has no presence in the state and doesn't meet the sales threshold, they may not charge Tennessee sales tax. In that case, Tennessee technically expects you to pay "use tax" — a tax on items you bring into the state — but this is rarely enforced for individual purchases.
Local tax rates vary by where you shop
Because Tennessee lets each county and city set its own local sales tax rate, the total you pay can differ depending on your location. The state portion is always 4%, but the local portion ranges from about 1.5% to 2.75% depending on where you are.
If you live near a county line, you might notice the tax rate changes when you cross into the next county. Some people shop strategically in lower-tax areas, though the difference is usually just a few cents on a typical purchase. For large purchases like cars or furniture, the location matters more.
Special situations: resale certificates and tax-exempt purchases
If you own a business and buy items to resell, you can provide a resale certificate to the seller so you don't pay sales tax on those purchases. The seller keeps the certificate on file and sends the tax to the state instead. You'll need to register with the Tennessee Department of Revenue to get a resale certificate.
Nonprofits and government agencies may also be exempt from sales tax on certain purchases, but the rules are specific. A nonprofit can't just claim exemption — they need to have the right status and follow Tennessee's procedures. If you represent an organization that might may have access to, contact the Tennessee Department of Revenue directly.
Frequently Asked Questions
Is Tennessee sales tax higher than other states?
Yes. Tennessee's combined state and local rate of 9.55% is among the highest in the country. Only a few states have higher average rates. However, Tennessee has no state income tax, so residents don't pay income tax on wages — the sales tax is how the state makes up that revenue.
Do I pay sales tax on groceries?
Yes, but at a lower rate. Unprepared food — groceries you buy to cook at home — is taxed at 4% (state tax only). Restaurant meals and prepared foods are taxed at the full rate including local tax. This distinction applies whether you shop in a grocery store or a restaurant.
What if a seller didn't charge me sales tax on an online order?
That's the seller's responsibility to fix, not yours. If a seller was required to charge tax and didn't, they owe the state that tax. You don't need to report it or pay it yourself. However, if you want to be thorough, you can contact the seller and ask them to charge the tax.
Do I need to pay sales tax on used items?
It depends on who you're buying from. If you buy a used item from a private person, there's no sales tax. If you buy from a used goods dealer or reseller, sales tax applies. The key is whether the seller is running a business — if they are, tax applies.
What's the difference between sales tax and use tax?
Sales tax is what you pay when you buy something in Tennessee. Use tax is a tax on items you bring into Tennessee from out of state. In practice, use tax is rarely enforced for individual shoppers. It's mainly a concern for businesses that buy large quantities of items out of state.