Tennessee's sales tax rate and what it covers

Tennessee's statewide sales tax is 9.55 percent. This is made up of a 4 percent state tax plus local taxes that vary by county and city — most counties add between 1.5 and 2.75 percent on top of the state rate. The total you pay depends on where you make the purchase, not where you live.

Sales tax applies to most goods you buy in stores, online, and by mail order. It covers clothing, electronics, groceries (with exceptions), household items, and prepared food. The tax is added at checkout — the price on the shelf does not include it.

Some items are not taxed or are taxed at a lower rate. Unprepared groceries like raw meat, produce, and bread are tax-free. Prescription medications are tax-free. Certain services — haircuts, repairs, professional services — are generally not subject to sales tax, though some exceptions exist.

Key Takeaways

  • Tennessee's sales tax starts at 9.55 percent statewide, but the exact rate you pay depends on your county and city because local taxes stack on top of the state rate.
  • Sales tax applies to most retail purchases, prepared food, and many services, but not to unprepared groceries, prescription drugs, or certain medical equipment.
  • The tax is collected by the seller at the point of sale and sent to the state and local tax authorities, not paid separately by you.
  • Online purchases from out-of-state sellers are subject to Tennessee sales tax if the seller has a physical presence or meets certain sales thresholds in the state.

Local tax rates vary by county and city

The 9.55 percent statewide rate is a floor, not a ceiling. Each county and city in Tennessee can add its own local sales tax on top of the state rate. Shelby County (Memphis) adds 2.25 percent, bringing the total to 9.55 percent. Davidson County (Nashville) adds 2.25 percent. Knox County (Knoxville) adds 2.25 percent. Other counties range from 1.5 to 2.75 percent.

Some cities within counties add an additional tax on top of the county rate. This means a purchase in one neighborhood can have a different total tax rate than a purchase a few blocks away. You can find your exact local rate by entering your address on the Tennessee Department of Revenue website or by calling your county assessor's office.

What is and is not taxed

Sales tax applies to tangible goods — anything you can touch and take home. Clothing, shoes, furniture, appliances, toys, and books are all taxed. Prepared food — restaurant meals, deli sandwiches, hot food from a grocery store — is taxed. Soft drinks and candy are taxed. Gasoline is taxed.

Unprepared groceries are not taxed. This includes raw vegetables, fruit, meat, poultry, fish, dairy products, bread, cereal, and canned goods. The rule is whether the food is ready to eat: if you have to cook or prepare it, it is not taxed. If it is ready to consume, it usually is.

Prescription medications and certain medical devices are not taxed. Over-the-counter medicines like aspirin and cold medicine are taxed. Services — haircuts, plumbing repairs, accounting, legal advice — are generally not taxed, though some specific services may be. Utilities like electricity and water are not subject to sales tax but may have other taxes or fees.

How online purchases are taxed

Online retailers must collect Tennessee sales tax on orders shipped to Tennessee addresses if the seller has a physical presence in the state (a warehouse, office, or employee) or if the seller meets certain sales thresholds. Most large online retailers now collect and remit Tennessee sales tax automatically.

If an online seller does not collect Tennessee sales tax at checkout, you may be responsible for reporting and paying the tax yourself through a "use tax" return. In practice, most individual consumers do not file use tax returns, but the obligation exists. The Tennessee Department of Revenue can provide more information about use tax if you receive an order from a seller who did not collect tax.

Who collects and where the money goes

The seller — the store, restaurant, or online retailer — collects sales tax from you at the point of sale and holds it temporarily. The seller then sends the tax to the Tennessee Department of Revenue, which splits it between the state and the local jurisdiction where the sale occurred. This happens monthly or quarterly depending on the seller's volume.

You do not send the tax directly to the government. The seller handles the collection and remittance. If a seller fails to collect or remit sales tax, that is a violation of state law, but it does not change your obligation to pay the tax.

Sales tax on specific items and situations

Vehicles are subject to sales tax when you purchase them from a dealer. The tax is calculated on the purchase price and is often collected at the time of registration with the Department of Motor Vehicles. If you trade in a vehicle, the tax is usually calculated on the net price (purchase price minus trade-in value).

Rental property and real estate are not subject to sales tax. Hotel rooms and short-term rentals are subject to a separate occupancy tax, which is different from sales tax. Memberships and subscriptions — gym memberships, streaming services — are generally not taxed, though some exceptions apply depending on the type of service.

Alcohol is subject to sales tax in addition to excise taxes. Beer, wine, and liquor purchased for off-premises consumption (to take home) are taxed at the regular sales tax rate. Alcohol consumed at a bar or restaurant is taxed as part of the prepared food rate.

Frequently Asked Questions

Why is the sales tax rate different in different parts of Tennessee?

Tennessee allows counties and cities to set their own local sales tax rates on top of the 4 percent state rate. This means each jurisdiction can fund local services differently. A county might add 2.25 percent while a neighboring county adds 1.5 percent, resulting in different total rates.

Do I pay sales tax on groceries?

Unprepared groceries — raw meat, vegetables, bread, milk, eggs, canned goods — are not taxed. Prepared foods like rotisserie chicken, deli sandwiches, and hot bar items are taxed. Candy and soft drinks are taxed even though they are food.

Is sales tax included in the price shown on the shelf?

No. The shelf price does not include sales tax. The tax is added at checkout. This is why your total bill is higher than the price tag. The exact amount depends on your local tax rate.

Do I have to pay sales tax on online orders from out-of-state companies?

Yes, if the company collects it. Most large online retailers now collect Tennessee sales tax automatically. If they do not, you may owe use tax, though most individual consumers do not report it. Check your receipt to see if tax was collected.

Are services like haircuts and repairs taxed?

Most services are not subject to sales tax in Tennessee. Haircuts, plumbing repairs, car repairs, and professional services are generally not taxed. However, if a service includes a taxable product — like a haircut with a product you take home — the product portion may be taxed.