Tennessee's statewide sales tax is 9.55 percent

Tennessee has one of the highest sales tax rates in the United States. The state sales tax rate is 9.55 percent, which combines a 4 percent state tax with a 5.55 percent local tax that varies by county and city. This means when you buy something in Tennessee, you pay the state portion plus whatever your local jurisdiction adds on top.

The local portion is where the variation happens. Some counties add 5.55 percent, while others add less. A few cities layer on additional local taxes for specific purposes like transit or tourism. The result is that your total sales tax can range from 9.55 percent to over 10 percent depending on where you shop.

Unlike income tax, which Tennessee does not have on wages, sales tax applies to most goods and some services. You pay it at the register when you buy physical items, and it is included in the final price you see on your receipt.

Key Takeaways

  • Tennessee's combined state and local sales tax is 9.55 percent at minimum, with some areas charging up to 10 percent or slightly higher.
  • The state portion is always 4 percent, but the local portion varies by county and city where you make the purchase.
  • Sales tax applies to most tangible goods but not to groceries, prescription medications, or most services.
  • Tennessee has no state income tax on wages, so sales tax is a primary source of state revenue.

How local taxes change your total rate

The 5.55 percent local portion is not uniform across the state. Each county and city sets its own local sales tax rate within state limits. This means the total you pay depends on your location, not on where the business is based or where the item was made.

For example, Davidson County (Nashville) charges 9.55 percent total. Shelby County (Memphis) also charges 9.55 percent. But some counties charge slightly less, and some cities within counties add an extra layer on top. A few municipalities have local taxes that push the total above 10 percent.

When you shop online and the seller ships to Tennessee, the sales tax applied is based on the delivery address, not where you ordered from. If you buy something online and pick it up in a store, the tax is based on the store location.

What items are taxed and what are not

Not everything you buy in Tennessee is subject to sales tax. Groceries and food for home consumption are not taxed. This includes bread, milk, vegetables, meat, and other items you cook at home. Restaurant meals and prepared foods are taxed.

Prescription medications are not taxed in Tennessee. Over-the-counter medications like pain relievers and cold medicine are taxed. Medical devices and equipment vary — some are taxed and some are not depending on how they are classified.

Most services are not taxed, including haircuts, repairs, and professional services. However, some specific services like hotel rooms, rental cars, and certain entertainment are taxed. Clothing is taxed in Tennessee, unlike some other states that exempt it.

Sales tax on online purchases and shipping

Online retailers must collect Tennessee sales tax on orders shipped to Tennessee addresses. This applies whether you order from a large national company or a small online seller. The tax rate used is the rate for the delivery address, not the seller's location.

Shipping charges are generally taxed if the item itself is taxable. If you buy groceries online and they are delivered, the groceries themselves are not taxed, but shipping may be taxed depending on how the seller structures the charge.

If you order from outside Tennessee and the seller does not collect sales tax, you may owe use tax on that purchase when you file your Tennessee tax return. Use tax is meant to level the playing field between in-state and out-of-state purchases, though most individual consumers do not report it.

How to find your specific local rate

To find the exact sales tax rate for your location, you need to know your county and city. The Tennessee Department of Revenue publishes a complete list of local sales tax rates by jurisdiction. You can search by county name or zip code to find the combined rate that applies where you live or shop.

If you are buying something in a different city or county than where you live, the tax rate at the point of sale is what matters. A purchase in Knoxville uses Knox County's rate, even if you live in a different county.

Many retailers' websites and checkout systems automatically calculate the correct rate based on your shipping or billing address. If you are unsure whether a rate is correct on a receipt, you can verify it through the Department of Revenue or by asking the store directly.

Why Tennessee's rate is high compared to other states

Tennessee ranks among the highest sales tax states in the nation because it has no state income tax. The state relies on sales tax, property tax, and other consumption-based taxes to fund government services instead of taxing wages. This trade-off means residents pay more at the register but nothing on their paychecks.

The local portion of the tax also contributes to the high total. Counties and cities use sales tax revenue for schools, roads, police, and other services. Some jurisdictions have added local taxes for specific projects like stadiums or transit systems.

Visitors and tourists pay sales tax just like residents do, so the tax also generates revenue from people who do not live in Tennessee but spend money there.

Frequently Asked Questions

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

No. The price on the shelf or tag does not include sales tax. The 9.55 percent (or higher, depending on location) is added at checkout. The total you pay is the shelf price plus the sales tax for your location.

Do I pay sales tax on groceries in Tennessee?

No. Groceries and food for home consumption are not taxed. This includes items like bread, produce, meat, and dairy. Restaurant meals, prepared foods, and food eaten on premises are taxed.

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 on items you buy outside Tennessee or from sellers who do not collect Tennessee sales tax. You are supposed to report and pay use tax on your state return, though most individuals do not.

Does Tennessee tax clothing?

Yes. Clothing is subject to Tennessee sales tax. Some states exempt clothing, but Tennessee does not. This applies to all apparel, shoes, and accessories.

Can I get a sales tax refund if I move out of Tennessee?

No. Sales tax is not refundable once you have paid it. If you are moving out of state, you do not get back the sales tax you paid on previous purchases.