Key takeaways
- Tennessee sales tax rates: The state rate is 7%, one of the highest in the country, and local rates of 1.5%–2.75% bring combined rates to roughly 8.5%–9.75%. A 2.75% single-article rate applies to the part of an item's price between $1,600 and $3,200.
- Economic nexus: Remote sellers must collect once sales into Tennessee exceed $100,000 during the previous 12 months. There is no transaction-count threshold.
- Filing & penalties: Returns are due on the 20th of the month after the period. Late filing or payment costs 5% per month of the tax due, up to 25% (minimum $15).
Tennessee sales tax key facts (2026)
| Item | Tennessee |
|---|---|
| Statewide rate | 7% |
| Combined rate range | ~8.5%–9.75% |
| Economic nexus threshold | $100,000 (no transaction count) |
| Sourcing | Origin (in-state) / destination (remote) |
Collect and file Tennessee sales tax with Taxually: LumaTax monitors your nexus, registers you and files your returns.
Is SaaS taxable?
Yes.
| Item | Tennessee |
|---|---|
| Groceries | Reduced 4% state rate (+ local) |
| Single-article tax | 2.75% on $1,600–$3,200 |
| Return due date | 20th of the month after the period |
| Governing agency | Tennessee Department of Revenue |
What is the sales tax rate in Tennessee?
Tennessee’s statewide sales tax rate is 7% — one of the highest base rates in the country. Local rates of 1.5%–2.75% bring combined rates to roughly 8.5%–9.75%. Tennessee also applies a single-article rate of 2.75% on the portion of a single item’s price between $1,600 and $3,200. Look up local rates on the Tennessee Department of Revenue site.
Do you have sales tax nexus in Tennessee?
Nexus is the connection that obligates your business to collect and remit Tennessee sales tax. You can establish it two ways — physically or economically. Either one is enough.
Physical nexus
You have physical nexus if you have a tangible presence in Tennessee, such as:
- A physical location, including a warehouse or distribution center
- Employees, contractors, or representatives in Tennessee
- Leasing property within the state
- Engaging in construction activities
- Delivering goods in company-owned vehicles
Economic nexus
Out-of-state sellers establish economic nexus once sales into Tennessee exceed $100,000 during the previous 12 months (Tennessee lowered this from $500,000 effective October 1, 2020). There is no transaction-count threshold.
What is taxable in Tennessee?
Most tangible personal property is taxable, with a few exceptions such as certain medical supplies and packaging. Certain services, including amusements, are taxable. Tennessee also hosts an annual sales tax holiday exempting some clothing, computers, and school supplies.
Is SaaS taxable in Tennessee?
Yes. Tennessee taxes SaaS — remotely accessed software has been taxable since 2015.
How is food taxed in Tennessee?
Food and food ingredients (groceries) are taxed at a reduced state rate of 4%, plus applicable local taxes. Prepared foods are taxed at the standard 7% state rate plus local.
How to register for a Tennessee sales tax permit
Register through the Tennessee Department of Revenue’s portal before collecting. Taxually can register for you, or you can apply online through TNTAP. Registration is free (note: you must generate at least $4,800 in annual Tennessee revenue or the license may be revoked).
Have ready: your reason for applying, gross sales, business start date, business name and location, mailing address, type of ownership, a description of your activities, and EDI/EFT details if applicable.
How to collect sales tax in Tennessee
Sourcing depends on who you are. Tennessee-based sellers collect at the rate of their business location (origin-based). Out-of-state sellers with nexus may either collect based on the buyer’s shipping address (destination-based) or charge a flat 9.25% (7% state + 2.25% local).
Filing and paying Tennessee sales tax
Filing frequency (monthly, quarterly, or annual) is assigned by volume. Returns are due the 20th of the month following the period (next business day if a weekend or holiday).
File and pay online through TNTAP or by mail using Form SLS-450. Taxually’s software automates the full process.
Penalties for late or non-compliant filing
Failing to file or pay on time triggers these penalties:
- Late filing/payment: 5% of the tax due per month, up to 25% (minimum $15).
- Interest accrues on late payments at the applicable rate.
Frequently asked questions
What is the sales tax rate in Tennessee in 2026?
The state rate is 7%, with local taxes bringing combined rates to roughly 8.5%–9.75%.
What is the economic nexus threshold for Tennessee?
$100,000 in sales into Tennessee during the previous 12 months. There is no transaction-count threshold.
Is SaaS taxable in Tennessee?
Yes. Tennessee taxes SaaS and remotely accessed software.
How are groceries taxed in Tennessee?
Groceries are taxed at a reduced 4% state rate plus local taxes. Prepared food is taxed at the full 7% plus local.
When are Tennessee sales tax returns due?
The 20th of the month following your reporting period.
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