Tennessee's statewide sales tax is 9.55 percent

Tennessee has one of the highest combined sales tax rates in the country. The state itself charges 9.55 percent on most purchases. This rate is made up of a 4 percent state tax plus a 5.55 percent local tax that varies by county and city. The exact amount you pay depends on where you buy something, not where you live.

When you see a price tag in a Tennessee store, that price does not include sales tax. The tax gets added at checkout. A $100 item will cost you between $109.55 and more, depending on your location within the state.

Key Takeaways

  • Tennessee's combined sales tax rate is 9.55 percent statewide, but the local portion varies by county and city, so rates range from 9.55 percent to over 10 percent depending on where you shop.
  • The state portion is 4 percent, and counties and cities add their own local taxes on top of that amount.
  • Sales tax applies to most goods but not to groceries, prescription medications, or certain medical equipment.
  • The tax is collected by the seller at the point of sale and sent to the state and local governments.

How the 9.55 percent breaks down by location

The state collects 4 percent. Counties then add between 1.75 percent and 2.75 percent depending on which county you are in. Cities can add an additional local option sales tax on top of that, which ranges from 0 to 2.25 percent. This means some Tennessee cities have combined rates above 10 percent.

Davidson County (Nashville) charges 9.55 percent total. Shelby County (Memphis) also charges 9.55 percent. Knox County (Knoxville) charges 9.55 percent. But Hamilton County (Chattanooga) charges 9.75 percent because the city adds an extra 0.25 percent local option tax. Williamson County charges 9.55 percent. The variation matters most if you shop near county or city lines.

You can find your exact local rate by entering your address on the Tennessee Department of Revenue website, or by asking a cashier at any store in your area.

What items are taxed and what are not

Most physical goods are subject to sales tax in Tennessee. Clothing, electronics, furniture, and household items all get taxed. Services are generally not taxed — haircuts, repairs, and professional services do not have sales tax added.

Groceries are not taxed in Tennessee. This includes food you buy at a supermarket to cook at home: bread, milk, vegetables, meat, and canned goods. However, prepared food and restaurant meals are taxed. Candy and soft drinks are also taxed because they are not considered groceries.

Prescription medications are not taxed. Over-the-counter medicines like aspirin or cold medicine are taxed. Medical equipment prescribed by a doctor — such as wheelchairs, oxygen equipment, or diabetic supplies — is not taxed if you have a prescription.

Online purchases and out-of-state orders

Online retailers are required to collect Tennessee sales tax on orders shipped to Tennessee addresses. This applies whether the retailer is based in Tennessee or elsewhere. Amazon, Walmart.com, and most major online sellers collect the tax automatically and show it in your total before checkout.

If you order from a small online seller who does not collect Tennessee sales tax, you may be responsible for reporting and paying the tax yourself when you file your state income tax return. In practice, most people do not do this, but the legal obligation exists. Large retailers and marketplaces handle collection for you.

Who collects the tax and where it goes

The store or seller collects sales tax from you at the point of sale. They then send that money to the Tennessee Department of Revenue, which distributes it to the state and to the local county and city governments. The seller acts as a collector on behalf of the government.

Local governments use their portion of sales tax revenue to fund schools, roads, police, fire departments, and other public services. The state portion goes to the general fund and various state programs. This is why sales tax rates differ by location — each county and city decides how much local tax to charge.

Sales tax on vehicles and large purchases

Vehicle sales are taxed at the same 9.55 percent rate (or your local rate) in Tennessee. When you buy a car, the dealer collects sales tax on the purchase price. If you trade in a vehicle, the tax is calculated on the net amount you pay after the trade-in credit is subtracted, not on the full price of the new vehicle.

Real estate — buying a house or land — is not subject to sales tax. Instead, there is a transfer tax and recording fees, which are separate from sales tax. Rental property and leases are also not subject to sales tax.

Frequently Asked Questions

Is Tennessee sales tax higher than other states?

Yes. Tennessee's 9.55 percent combined rate is among the highest in the nation. Only a few states have higher combined rates. However, Tennessee has no state income tax, which is why the sales tax is higher — the state relies more on sales tax revenue than income tax revenue.

Do I pay sales tax if I buy something in another state and bring it to Tennessee?

No. Sales tax is charged where the purchase happens, not where you live or where you use the item. If you buy something in a state with a lower sales tax rate and bring it home to Tennessee, you pay that state's rate at checkout. You do not owe Tennessee sales tax on it later.

What if a store charges me the wrong sales tax amount?

Ask the cashier or manager to recalculate it. Most errors are caught at the register. If you believe you were overcharged, you can contact the store's customer service. For systematic overcharging or disputes, you can file a complaint with the Tennessee Department of Revenue.

Are there any exemptions for low-income shoppers?

Tennessee does not offer a sales tax exemption based on income level. However, certain items like groceries and prescription medications are not taxed, which reduces the tax burden on all shoppers regardless of income.