Tennessee Sales Tax Rate Explained
Tennessee's state sales tax is 7%, tied for the highest base rate in America. The Tax Foundation's midyear 2026 data adds an average local rate of 2.61%, bringing the typical combined rate to 9.61%, the second-highest combined average in the country. Only Louisiana ranks higher.
The high rate is the flip side of having no state income tax on wages. Tennessee funds its government heavily through consumption, which means every purchase carries more weight than it would in a state that also taxes paychecks.
What Is Taxed and What Is Exempt in Tennessee
Tennessee taxes most tangible goods at the full 7% state rate: clothing, electronics, furniture, vehicles, and restaurant meals. Services are generally exempt, which keeps the tax on goods rather than labor.
Groceries are Tennessee's most debated tax policy. Unprepared food is taxed at a reduced 4% state rate instead of 7%, but local add-ons of 1.5% to 2.75% still apply, bringing the combined grocery rate to roughly 5.5% to 6.75%. It is relief, not an exemption, and proposals to eliminate the grocery tax entirely have repeatedly failed.
Example: A $1,000 Purchase in Memphis
Memphis sits in Shelby County at a combined 9.75%. A $1,000 purchase works out to $1,000 times 0.0975, which is $97.50 in tax, for a total of $1,097.50. Nashville matches that 9.75% figure, while Knoxville and Chattanooga run 9.25%.
Groceries tell a different story. A $200 grocery run in Memphis faces the 4% state food rate plus local add-ons, roughly 6.5% combined, adding about $13.00 in tax. That is real money every week that shoppers in most other states never pay.
Local Sales Taxes in Tennessee
Tennessee counties and cities add local option taxes ranging from 1.5% to 2.75%, and most urban counties sit at the top of that range. The Tax Foundation lists the maximum local add-on at 2.75%, which is what pushes Memphis and Nashville to 9.75%.
The state caps the local rate so that the combined rate cannot exceed 9.75% on most goods, which is why the biggest cities all converge on that figure. It functions as both a ceiling and a target.
Online Shopping and Marketplace Sales in Tennessee
Tennessee enforces economic nexus and requires marketplace facilitators to collect, so major online retailers charge Tennessee tax at checkout. The rate follows the delivery address, meaning a Memphis delivery is taxed at 9.75%.
Online grocery orders get the same reduced food rate as in-store purchases. The 4% state rate on food applies whether the groceries come from a Kroger shelf or a delivery van, with local add-ons stacked on top either way.
Does Tennessee Have a Sales Tax Holiday?
Yes. Tennessee holds its sales tax holiday on the last weekend of July, which means July 31 through August 2 in 2026. Clothing and school supplies priced at $100 or less per item are exempt, and computers at $1,500 or less qualify too.
The holiday is well timed for back-to-school shopping and genuinely useful given the state's high rates. A family outfitting two kids can save real money, though the grocery tax keeps running through the weekend untouched.
Frequently Asked Questions
What is the Tennessee sales tax rate?
The state rate is 7%, tied for highest in the nation. With local add-ons, the average combined rate is 9.61%; Memphis and Nashville are 9.75%.
Are groceries taxed in Tennessee?
Yes, at a reduced 4% state rate plus local add-ons of 1.5% to 2.75%, for a combined grocery rate of roughly 5.5% to 6.75%.
What is the sales tax in Memphis?
Memphis, in Shelby County, has a combined rate of 9.75% on most goods.
Does Tennessee have a sales tax holiday?
Yes. The last weekend of July each year. In 2026 it runs July 31 to August 2, covering clothing, school supplies, and computers within price caps.
Why is Tennessee sales tax so high?
Tennessee has no state income tax on wages, so sales tax carries an unusually large share of state revenue.
Do online sellers collect Tennessee tax?
Yes, once they meet nexus thresholds. Marketplaces collect based on the delivery address at the local combined rate.
Related Calculators
Rank all 50 states on the main Sales Tax Calculator, or compare the South on our South Carolina, North Carolina, and Texas pages. For take-home pay with no state income tax, try the Tennessee Paycheck Calculator.
Sources: Tax Foundation, State and Local Sales Tax Rates, Midyear 2026 and Tennessee Tax Guide 2026. Figures reviewed for 2026. This calculator provides an estimate for planning purposes and is not tax advice, confirm your exact rate with the Tennessee Department of Revenue.