The 2016 Tennessee State Sales Tax
What is the 2016 Tennessee Sales Tax Rate?
The Tennessee state sales tax rate is 7%, and the average TN sales tax after local surtaxes is 9.45%.
Counties and cities in Tennessee are allowed to charge an additional local sales tax on top of the Tennessee state sales tax in increments of 0.25%. If a county does not charge the maximum allotted local sales tax, cities located within that county can charge all or part of the unused local tax amount.Single Article Sales Tax Limits
Tennessee has a unique law that limits the amount of sales tax that can be collected by localities on a single item, known as the Single Article Tax. A "single article" is defined by the state as a unit of tangible personal property, not including any accessories or add-ons, that is sold as a single unit. The Single Article Tax limits the taxable value of a single article to $1,600 in most localities, and a few localities setting lower maximum taxable values. Groups of items that can be and are sold separately are not considered single articles.
The single article tax is important in Tennessee because it effects the taxation of high-value items like automobiles, boats, and machinery. Local sales tax on a $10,000 car in a jurisdiction with a 2.25% local sales tax, for instance, will only collect 2.25% of the maximum taxable value of $1,600, which is just $36.00.
Groceries (unprepared food) is taxed at a reduced rate of 5.5%, but are not completely exempt from sales tax as they are in many other states.
|Tennessee Sales Tax Help Hotlines|
|Chattanooga||(423) 634-6266||Knoxville||(865) 594-6100|
|Jackson||(731) 423-5747||Memphis||(901) 213-1400|
|Johnson City||(423) 854-5321||Nashville||(615) 253-0600|
If you are a Tennessee business owner, you can learn more about how to collect and file your Tennessee sales tax return at the 2016 Tennessee Sales Tax Handbook .
Tennessee Sales Tax Exemptions
Tennessee does not exempt any types of purchase from the state sales tax. Groceries is subject to special sales tax rates under Tennessee law. In most states, necessities such as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate.
Some items may not be eligible for these reduced sales tax rates, such as expensive clothing, unhealthy food or drinks like soda, and certain non-essential pharmaceuticals. Unlike many states, Tennessee treats both candy and soda as groceries for sales tax purposes. Other items including gasoline, alcohol, and cigarettes are subject to various Tennessee excise taxes in addition to the sales tax.
Tennessee has three sales tax holidays, during which certain items can be purchased sales-tax free. For more details, see the Tennessee sales tax holiday calendar.
In some states, items like alcohol and prepared food (including restaurant meals and some premade supermarket items) are charged at a higher sales tax rate. The TN sales tax applicable to the sale of cars, boats, and real estate sales may also vary by jurisdiction. Tennessee's sales tax rates for commonly exempted items are as follows:
$100 Restaurant Dinner
$100 of groceries
$100 in clothes
$100 of consumer products
$7.00 sales tax
$5.00 sales tax
$7.00 sales tax
$7.00 sales tax
Tennessee Sales Tax Exemption Certificate
Unlike a Value Added Tax (VAT), the Tennessee sales tax only applies to end consumers of the product. Individuals and companies who are purchasing goods for resale, improvement, or as raw materials can use a Tennessee Sales Tax Exemption Form to buy these goods tax-free.
Companies or individuals who wish to make a qualifying purchase tax-free must have a Tennessee state sales tax exemption certificate, which can be obtained from the Tennessee Department of Revenue . On making an exempt purchase, Exemption Certificate holders may submit a completed Tennessee Sales Tax Exemption Form to the vendor instead of paying sales tax.
Sales tax exemption forms (as well as business sales tax id applications, sales tax returns, and the full Tennessee sales tax code) can be downloaded from the Tennessee Department of Revenue here .
Tennessee Sales Tax Calculator
Whenever you make a purchase at a licensed Tennessee retailer, your sales tax will be automatically calculated and added to your bill. To lookup the sales tax due on any purchase, use our Tennessee sales tax calculator.
Tennessee Use Tax
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If you buy goods and are not charged the Tennessee Sales Tax by the retailer, such as with online and out-of-state purchases, you are supposed to pay the 7% sales tax (less any foreign sales tax paid) for these items yourself as the Tennessee Use Tax.
Your are expected to voluntarily list your liable purchases on a Tennessee Use Tax Return, which should be attached with payment to your Tennessee Income Tax Return. Historically, compliance rates with with the Tennessee Use Tax have been low.
Tennessee Local Sales Taxes
Tennessee does not allow local jurisdictions like cities or counties to collect a local sales tax. The Tennessee state sales tax of 7% is applicable statewide. You can view the sales tax rates for various cities in Tennessee here.
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