Statewide, the Tennessee sales tax rate is 7.00%. But once you add in county-level local taxes, transactions in many places can increase to a combined rate of up to 9.75%. The product type being taxed matters, too: groceries are taxed differently than general merchandise, and digital goods and Software-as-a-Service (SaaS) products have their own rules that can catch businesses off guard.

Below, we explain the Tennessee state and local tax rates, what’s taxable and what’s exempt, and how to calculate what tax to charge on any given transaction.

Highlights

• Tennessee’s base sales tax rate is 7.00%, but the combined rate can be as high as 9.75%.

• Local sales tax in Tennessee is set at the county level. The combined rate applies across all cities within a given county.

• Remote businesses selling into Tennessee must collect sales tax once they reach the annual sales threshold.

What is the Tennessee sales tax rate?

Tennessee's state sales tax rate is 7.00%. Once county sales tax is added, the combined Tennessee sales tax rate is anywhere from 9.00%–9.75%.

Sales tax applies to most tangible personal property, digital goods, and certain services. Groceries get partial relief: food and food ingredients are taxed at 4.00% at the state level, though prepared food gets taxed at the full 7.00%. Digital goods include downloaded software, software-as-a-service (SaaS), streaming services, and digital books. Taxable services include installation services, repair services, and certain telecommunications services.

These sales categories are not subject to sales tax in Tennessee:

• Sales to nonprofits holding a valid exemption certificate

• Sales for resale, if the buyer provides a resale certificate

• Manufacturing machinery and industrial equipment used directly in production

• Prescription drugs

What are the local sales tax rates in Tennessee?

Every county or incorporated city is authorized to levy sales tax, and nearly all counties do. The local tax can be up to 2.75% on top of the state's 7.00% sales tax. Davidson, Knox, and Hamilton counties levy 2.25% locally, producing a 9.25% combined rate for Nashville, Knoxville, and Chattanooga. Local sales tax follows the same rules as the state tax; If something's exempt at the state level, local tax generally doesn't apply either.

2026 Tennessee sales tax range

What is Tennessee’s sales tax rate by city?

Because local sales tax in Tennessee is set at the county level, the rate in any given city is determined by the county it sits in. The table below reflects the minimum combined rate (state plus county sales taxes) that Tennessee businesses must collect for the state’s 20 largest cities.

What is Tennessee’s sales tax rate by county?

Combined sales tax rates in Tennessee’s 95 counties range from 9.00% to 9.75%. The table below covers the state's largest counties by population. Smaller counties such as Hancock have a local rate of 2.00%.

When do businesses need to collect Tennessee sales tax?

Tennessee requires businesses to collect and remit sales tax if they have physical or economic nexus in the state. Physical nexus means you have a store, warehouse, office, or employee in Tennessee. Economic nexus starts once your business crosses $100,000 in Tennessee sales over 12 months. At that point, you're required to register with the Tennessee Department of Revenue and start collecting and remitting sales tax.

Collecting the wrong rate (or not collecting when you should) creates liability. If you've been making sales into Tennessee without registering when you should have, the Department of Revenue has a Voluntary Disclosure program that can reduce what's owed.

If you're operating physical locations in multiple Tennessee counties, you might need to collect sales tax at different rates. A store in Memphis collects 9.75% in sales tax, while a store in Knoxville collects 9.25%. Your point-of-sale system needs to reflect each county's rate.

If you’re a remote seller, the rate that applies is the destination rate: where the buyer is. That means you need accurate address-level data for every Tennessee buyer. Tools such as Stripe Tax handle this automatically, determining the correct combined sales tax rate for each transaction based on the buyer's location. You can find more detail in Stripe's documentation.

How do you calculate Tennessee’s sales tax?

The calculation of Tennessee sales tax itself is straightforward: multiply the taxable sale amount by the applicable combined rate.

But there are a few things to watch for in practice:

• Rounding: Tennessee follows the standard rule of rounding to the nearest cent. Some older systems apply rounding at the line-item level rather than the transaction level, which can create discrepancies at scale.

• Mixed carts: If you're selling both food and non-food items, you have to apply different sales tax rates to each line item.

• Exempt items: Don't fold exempt items into your taxable subtotal. A poorly configured system can calculate tax on the wrong base without flagging it.

Stripe’s sales tax calculator makes it easy to check the correct rate of local tax.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.