Tennessee (TN) levies a 7% state sales tax, making it essential for businesses to understand collection and remittance obligations. As of 2026, the LLC filing fee is $300 with no annual franchise tax.
Economic Nexus in Tennessee
Remote sellers must collect Tennessee sales tax if they exceed $100,000 in annual sales within the state. This threshold has been in effect since 2020-10-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Tennessee Department of Revenue enforces these provisions and provides registration guidance at https://www.tn.gov/revenue.
LLC Formation in Tennessee (2026)
Forming an LLC in Tennessee costs $300 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $300. Tennessee has no state income tax, making it attractive for LLC owners seeking tax efficiency.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Tennessee Department of Revenue.
Key Tax Rules
• Tennessee has a 7% state sales tax rate, one of the highest in the nation.
• Local taxes can add up to 2.75%, for combined rates up to 9.75%.
• Groceries are taxed at a reduced 4% state rate.
• Tennessee has no state income tax on wages.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Tennessee: prescription drugs, medical devices, agricultural equipment. Businesses should maintain proper documentation for exempt transactions.