Tennessee sales tax is a 9.55% tax on most goods you buy, made up of a state rate plus local add-ons that vary by county

Tennessee has no state income tax, but it funds state services through sales tax instead. When you buy something in Tennessee, you pay a state sales tax of 9.55% on top of the price. This rate is the same everywhere in the state, but your county or city may add a local tax on top of it. Your total sales tax bill depends on where you live and shop.

The state portion funds education, infrastructure, and other state programs. Local portions fund schools, transit, and municipal services in your area. You see the combined rate at checkout — there is no separate line item for state versus local, just one total tax added to your purchase.

Key Takeaways

  • Tennessee's state sales tax rate is 9.55%, but your total rate is higher when you add local taxes, which range from 1.25% to 2.75% depending on your county.
  • Most tangible goods are taxed, including clothing, groceries, and prepared food, but some items like prescription medications and unprepared groceries are exempt.
  • Services are generally not taxed in Tennessee unless they are specifically listed in the tax code, such as certain repairs and installations.
  • Online purchases from out-of-state sellers are subject to Tennessee sales tax if the seller has a physical presence in the state or meets federal economic nexus thresholds.

How the 9.55% state rate breaks down

The state sales tax of 9.55% is actually three separate taxes stacked together: a 4% general sales tax, a 2% tax on food and groceries, and a 3.55% tax on certain items. This structure means different products can hit different rates within that 9.55% total, depending on what category they fall into.

Most everyday purchases — clothing, household goods, electronics, prepared food — are taxed at the full 9.55% state rate. Groceries you cook at home are taxed at a lower rate. Prescription medications and medical devices are exempt from state sales tax entirely. When you add your local tax on top, your final rate at the register will be higher than 9.55%.

Local taxes add 1.25% to 2.75% on top of the state rate

Every Tennessee county adds its own local sales tax, which ranges from 1.25% to 2.75%. This means your total sales tax bill varies depending on which county you shop in. Davidson County (Nashville) has a combined rate of 9.55% state plus 2.25% local, for a total of 11.8%. Shelby County (Memphis) is 9.55% plus 2.25%, also 11.8%. Smaller counties may have lower local rates.

If you live near a county line, shopping in a different county can change your tax bill. Some people cross county lines to buy large items in lower-tax areas, though this is only practical for major purchases. The local tax you pay depends on where the sale physically happens, not where you live.

What is and is not taxed in Tennessee

Most tangible goods are taxed: clothing, shoes, furniture, appliances, toys, books, and electronics all carry the full sales tax. Prepared food — restaurant meals, deli items, hot food from a grocery store — is taxed. Groceries you cook at home, like raw vegetables, meat, and bread, are taxed at a lower rate (the 2% food tax, not the full 9.55%).

Exempt items include prescription medications, medical devices prescribed by a doctor, and certain medical equipment. Unprepared groceries are taxed at the lower rate. Services are generally not taxed unless they are specifically listed in the tax code — for example, labor for certain repairs and installations may be taxable, but a haircut or doctor visit is not.

Digital products and software are taxed in Tennessee. Streaming services, downloaded music, e-books, and software licenses are subject to sales tax. This applies whether you buy from an in-state or out-of-state seller.

How online purchases are taxed

If you buy from an online retailer that has a physical location in Tennessee or meets federal economic nexus thresholds, Tennessee sales tax applies to your purchase. Most large online retailers — Amazon, Walmart, Target — collect Tennessee sales tax because they have warehouses or other operations in the state or because they exceed the federal threshold for sales tax collection (currently $600 in annual sales to Tennessee residents).

If you buy from a small out-of-state seller with no Tennessee presence and below the federal threshold, you may not see sales tax at checkout. However, you are technically responsible for paying use tax on that purchase when you file your state tax return. In practice, most individual shoppers do not report use tax, but businesses are expected to track and pay it.

Who collects and where the money goes

The retailer or seller collects sales tax at the point of sale and sends it to the Tennessee Department of Revenue. The state keeps the 9.55% portion and distributes the local portion to your county and city. Businesses file sales tax returns monthly or quarterly, depending on their volume.

If you are a business owner in Tennessee, you must register for a sales tax permit with the Department of Revenue before you open. You collect tax from customers, hold it in a separate account, and remit it on schedule. Failure to collect or remit sales tax can result in penalties and interest.

Frequently Asked Questions

Is clothing taxed in Tennessee?

Yes, clothing is taxed at the full 9.55% state rate plus your local tax. Tennessee does not have a clothing exemption like some states do. This applies to all apparel, shoes, and accessories.

Do I pay sales tax on groceries?

Unprepared groceries — raw meat, vegetables, bread, milk, eggs — are taxed at 2%, not the full 9.55%. Prepared food from a restaurant or deli counter is taxed at the full rate. The distinction is whether the food is ready to eat.

What if I buy something online from out of state?

If the seller has no Tennessee presence and is below the federal economic nexus threshold ($600 in annual sales to the state), you may not see sales tax at checkout. You are responsible for reporting use tax on your state return, though most individuals do not. Large retailers collect Tennessee tax regardless of where they are located.

Are services taxed in Tennessee?

Most services are not taxed — haircuts, medical visits, and legal information are exempt. However, some services like certain repairs, installations, and labor on tangible goods may be taxable. Check with the specific service provider or the Department of Revenue if you are unsure.

How do I find my exact local sales tax rate?

Your total rate depends on your county and sometimes your city. The Tennessee Department of Revenue website has a sales tax rate lookup tool where you can enter your address and see your combined state and local rate. Rates can change, so check before making a large purchase if the rate matters to your decision.