Tennessee's sales tax rate and what it covers

Tennessee has a statewide sales tax of 4.55%, but the total rate you pay depends on where you shop. Most counties add a local sales tax on top of the state rate, bringing the combined total to between 8.55% and 9.55% in most places. Some counties charge less — Grundy County sits at 8.55% — while others like Davidson County (Nashville) charge 9.55%. The rate you see on a receipt is the combined state and local tax for that specific location.

Sales tax in Tennessee applies to most goods you buy in stores, including clothing, electronics, groceries, and household items. However, certain items are taxed differently or not at all. Unprepared food — raw ingredients you cook at home — is not taxed. Prepared food from restaurants, bakeries, and deli counters is taxed at the full rate. Prescription medications are not taxed, but over-the-counter drugs and vitamins are.

Key Takeaways

  • Tennessee's statewide sales tax is 4.55%, but your actual rate includes a local county tax that ranges from 4% to 5%, making your total between 8.55% and 9.55%.
  • Unprepared groceries like raw meat, vegetables, and bread are not taxed, but prepared food from restaurants and deli counters is taxed at the full rate.
  • Prescription medications are exempt from sales tax, but over-the-counter medicines, vitamins, and supplements are taxed.
  • Services like haircuts, car repairs, and medical visits are generally not subject to sales tax, though some specific services may be taxed depending on the county.

What is and is not taxed in Tennessee

The line between taxed and untaxed items can be confusing because it depends on how the item is sold, not just what it is. A rotisserie chicken from a grocery store deli counter is taxed. A raw chicken from the meat department is not. A candy bar is taxed. A loaf of bread is not. The rule is simple: if you are buying something ready to eat, it is taxed. If you are buying ingredients to prepare yourself, it is not.

Services are generally not taxed in Tennessee. When you pay a plumber, electrician, or mechanic, there is no sales tax on their labor. Haircuts and salon services are not taxed. Medical and dental services are not taxed. However, if you buy a product as part of that service — like a haircut plus a product they apply — the product portion may be taxed depending on how the business separates the charges.

Digital goods and services have specific rules. Software licenses, streaming subscriptions, and digital downloads are taxed. Telecommunications services like cell phone plans are taxed. However, these rules can vary by county, so the tax rate on your phone bill may differ from the rate on a purchase at a store.

Local county tax rates across Tennessee

Tennessee divides sales tax into state and local portions. The state collects 4.55%, and each county adds its own local rate. This means the total you pay varies by location. If you shop in one county and live in another, you pay the tax rate where you make the purchase, not where you live.

The local rates range from 4% in some counties to 5% in others. Davidson County (Nashville area) charges 5%, bringing the total to 9.55%. Shelby County (Memphis area) also charges 5%, for a total of 9.55%. Knox County (Knoxville area) charges 4.25%, for a total of 8.8%. Smaller counties may have lower local rates. If you need the exact rate for your county, the Tennessee Department of Revenue publishes a complete list on its website, organized by county.

How sales tax is calculated on your receipt

Sales tax is calculated on the subtotal before any discounts are applied. If you have a coupon or a store discount, the tax is calculated on the reduced price. If you buy an item on sale, tax is calculated on the sale price, not the original price. This means your final total is the subtotal after discounts, plus the sales tax on that reduced amount.

Some items on your receipt may have different tax rates. Groceries are not taxed, but if you buy groceries and a magazine in the same transaction, only the magazine is taxed. The cashier's system separates these automatically. On your receipt, you should see the taxable subtotal and the non-taxable subtotal listed separately, then the tax amount calculated only on the taxable items.

Sales tax on online and mail orders

Tennessee requires online retailers to collect and send sales tax if they have a physical presence in the state or meet certain sales thresholds. Large retailers like Amazon, Walmart, and Target collect Tennessee sales tax on orders shipped to Tennessee addresses. Smaller online sellers may not, depending on their sales volume and whether they have a warehouse or office in Tennessee.

If you order from an out-of-state seller who does not collect Tennessee sales tax, you are technically responsible for paying "use tax" — a tax on items you buy outside the state and bring into Tennessee. In practice, most individuals do not pay use tax on personal purchases. However, businesses are required to track and report use tax on business purchases.

Who collects and where the money goes

Retailers collect sales tax at the point of sale and send it to the Tennessee Department of Revenue. The state keeps the 4.55% state portion and distributes the local portion to each county. Counties use their local sales tax revenue for schools, roads, public services, and other local needs. The split between state and local varies slightly by county based on local agreements.

Businesses are required to register with the Tennessee Department of Revenue before they can collect sales tax. They file returns monthly or quarterly depending on their sales volume. If a business fails to collect or remit sales tax, the state can pursue the business and, in some cases, hold the business owner personally responsible.

Frequently Asked Questions

Do I pay sales tax on groceries in Tennessee?

No, unprepared groceries are not taxed. This includes raw meat, vegetables, bread, milk, eggs, and canned goods. However, prepared foods like deli chicken, bakery items sold as ready-to-eat, and restaurant meals are taxed at the full rate.

Is sales tax the same everywhere in Tennessee?

No. The state rate is 4.55% everywhere, but each county adds a local tax between 4% and 5%. Your total rate depends on which county you are shopping in. Nashville and Memphis have the highest combined rates at 9.55%, while some rural counties are lower.

Do I have to pay sales tax on services like haircuts or car repairs?

No, labor and services are generally not taxed in Tennessee. You do not pay sales tax on haircuts, plumbing, car repairs, or medical visits. However, if you buy a product as part of that service, the product itself may be taxed.

What happens if a business does not collect sales tax?

The Tennessee Department of Revenue can audit the business and require them to pay back taxes plus penalties and interest. In some cases, the state can hold the business owner personally liable. Customers are not responsible for unpaid sales tax — that is the business's obligation.

Do I pay sales tax on online orders shipped to Tennessee?

Large online retailers are required to collect Tennessee sales tax. Smaller sellers may not, depending on their sales volume and physical presence in the state. If tax was not collected, you are technically responsible for use tax, though most individuals do not pay it on personal purchases.