Sales Tax Rules
Tennessee imposes a state sales tax rate of 7%, with a maximum combined rate (state plus local) of 9.75% when local taxes are added. Economic nexus is triggered at $100,000 in sales — meaning out-of-state businesses that exceed this threshold must collect and remit Tennessee sales tax. SaaS and digital software products are taxable in Tennessee. Groceries are subject to sales tax in Tennessee.
SaaS Tax Details
SaaS is taxable as the use of computer software.
Grocery Details
Taxed at a reduced state rate of 4% plus local taxes.
What is the sales tax rate in Tennessee?
Tennessee's state sales tax rate is 7%. When local taxes are added, the maximum combined rate can reach 9.75%. The actual rate you pay depends on the county and city where the purchase is made.
What is the economic nexus threshold in Tennessee?
Tennessee requires out-of-state businesses to collect sales tax once they exceed $100,000 in sales in a calendar year. Once nexus is established, the business must register, collect, and remit Tennessee sales tax.
Is SaaS taxable in Tennessee?
Yes. Tennessee considers SaaS (Software as a Service) taxable. Businesses selling SaaS products to Tennessee customers must collect sales tax. SaaS is taxable as the use of computer software.
Are groceries taxed in Tennessee?
Groceries are subject to sales tax in Tennessee. Taxed at a reduced state rate of 4% plus local taxes.
Are digital goods taxable in Tennessee?
Yes. Tennessee taxes digital goods including downloaded software, music, movies, and e-books. Businesses selling digital products to Tennessee customers should collect sales tax.
Are clothing items exempt from sales tax in Tennessee?
Clothing is subject to sales tax in Tennessee at the standard state rate.
How often do I need to file sales tax in Tennessee?
Tennessee requires sales tax filing on a Monthly, Quarterly, or Annual. Online filing is available through the official Department of Revenue portal.
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Official Source
Tennessee Department of Revenue
Last verified: 2026-03-26 · Always confirm current rates with your tax advisor before filing.