Sales and Use Taxes

The Tax -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 is required to register with the Department of Revenue which then provides the periodic sales tax return forms.

Tax Rate - State sales tax: 7% Local option sales tax: 1 % - 2.75%

Tax Incentives and Exemptions:

• Rate of 6% for food and food ingredients for human consumption (with the exception of candy, dietary supplements, prepared food, alcoholic beverages and tobacco products. Industrial machinery and equipment are exempt.
• Repairs to industrial machinery are exempt.
• Raw materials for processing are exempt.
• Air and Water pollution equipment for manufacturers are exempt. Other air and water pollution equipment may be eligible for a sales tax credit.
• The sales tax rates for manufacturers' use of energy fuel and water are reduced. Both are taxed at 1.5%.
• Equipment associated with the required capital investment by a distribution or warehouse facility is exempt. To qualify, the taxpayer must invest in building and equipment in excess of $10 million over a period of 3 years or less.
• Refund taxes paid on goods and services by motion picture production companies filming or producing in Tennessee. Requires expenditures of $500,000.