The Tennessee (TN) state sales tax rate is currently 7%, ranking 2nd highest in the U.S. Depending on local municipalities, the total tax rate can be as high as 10%. The average local rate is 2.46%. The average combined tax rate is 9.46%, ranking 1st in the US.

Local taxes apply to both intra-state and inter-state transactions.

Tennessee residents and businesses must pay use tax when goods are purchased from outside the state of Tennessee and brought or shipped into the state and the seller did not collect sales tax on the purchase.

In Tennessee, food is is taxed at reduced rate of 4%. Prescription drugs, oxygen, insulin, durable medical equipment, prosthetic devices, kidney dialysis equipment, and enteral feeding systems are exempt from sales and use tax.

Tennessee participates in the Streamlined Sales Tax Project (SSTP).

The state of Tennessee's annual sales tax holiday is held every year, beginning on the last Friday in July and ending the following Sunday night. During this weekend, clothing under $100, school supplies and school art supplies under $100 and computers under $1,500 can be purchased tax free.