Sales and use tax
7% state; local levies vary from 0-2.75%
Applies to any person or company who manufactures, distributes or sells tangible personal property within the state of Tennessee. The seller is responsible for this tax. Every person or company engaged in consumer sales is required to register with the Department of Revenue, which provides periodic sales tax return forms.
There is no sales tax in Tennessee on:
- Purchases, installation, and repairs of qualified industrial machinery.
- Purchases of material handling and racking equipment associated with the required capital investment of $10 million by a distribution or warehouse facility.
- Raw materials for processing.
- Pollution control equipment of manufacturers.
- Reduced sales tax for manufacturers' use of energy fuel and water. Rates are:
- 1 percent for water sold to or used by manufacturers;
- 1.5 percent vs. 7% for energy fuels sold to or used by manufacturers.
- Tax-exempt if used directly in the manufacturing process and separately metered.
- Any materials that become a component part of the finished product.
- Containers, labels and packaging materials if they are sold with or accompany the product at no additional charge.