Tennessee Sales & Use Tax 2025

Tennessee Sales Tax Guide for SaaS and E-Commerce Businesses 2025

2025-09-18

Statewide Sales Tax Rate

Local Option Rate

0% - 2.75%

Economic Nexus

$100,000

Is SaaS Taxable?

Yes

Tennessee sales tax for SaaS & digital products

Tennessee imposes a state sales & use tax of 7%, plus a local option tax up to 2.75% depending on the city/county. See the Department of Revenue’s overview: Sales & Use Tax and Local Sales Tax.

This guide covers SaaS, digital products, economic nexus, marketplace facilitator rules, sourcing, shipping, single-article limits, registration, and filing with citations to official Tennessee sources.

Last updated: September 2025

Quick Reference: Tennessee Sales & Use Tax (2025)

Topic	Details
General state rate	7% state portion. Local rates vary by jurisdiction (0% - 2.75%). (Sales & Use Tax; Local Sales Tax)
Local rates	Set by city/county; max 2.75%. (Local Sales Tax)
Economic nexus	$100,000 in sales to TN customers in the previous 12 months. (Out-of-State Dealers & Marketplace Facilitators)
Marketplace facilitators	Required to remit if >$100,000 in TN sales in previous 12 months. (Out-of-State Dealers & Marketplace Facilitators)
SaaS / Cloud	Taxable as remotely accessed software. (RAS-1 Overview; Notice 15-14)
Specified digital products	Taxable at 7% state + standard local 2.5% (digital audio-visual works, digital audio works, and digital books). (SUT-65; DOR PDF)
Shipping/Delivery	Taxable when the underlying sale is taxable (delivery charges are included in “sales price”). (SUT-23; Sales & Use Tax Guide)
Sourcing	Destination-based for remote/out-of-state sellers (collect local tax where the order is shipped/delivered). (Sales & Use Tax Guide)
Single-article rules	Local tax applies only to first $1,600 of a single article; additional state single-article tax of 2.75% applies on $1,600–$3,200. (SUT-6)
Filing due date	20th of the month after the period (monthly/quarterly); annual due Jan 20. (Due Dates & Tax Rates)
Registration & filing	Register/file/pay online via TNTAP. (Registration (TNTAP); TNTAP)

SaaS & Software Taxability in Tennessee

Remotely accessed software (SaaS/IaaS/PaaS) is taxable when accessed from a location in Tennessee. The software remains in the seller’s possession and is accessed by the purchaser remotely.

Definition & rule of thumb: Access of remotely accessed software from a Tennessee location is subject to TN sales and use tax. (RAS-1 Overview)
Rates & billing: The seller must collect 7% state + applicable local on charges for RAS (per-user, per-license, subscription, etc.) for billing periods on/after 7/1/2015. (Important Notice 15-14)
What’s not RAS: Data/information processing services, payment/transaction processing, payroll, internet access, storage of data/digital codes/software, and services that convert/manage/distribute digital products. (See exclusions in RAS-1)

Digital Products

Specified digital products: digital books, digital audio works, and digital audiovisual works delivered electronically, are taxable at 7% state + a standard local rate of 2.5% (this special local rate replaces the normal local rate for these items).
Sources: SUT-65; DOR “Specified Digital Products” PDF

E-Commerce & Tangible Goods in Tennessee

Category	Taxable?	Notes / Authority
Tangible personal property	Yes	7% state + local (varies, up to 2.75%). Sales & Use Tax; Local Sales Tax
Prewritten software (downloaded/on-prem)	Yes	Generally taxable; see software sections in the DOR Sales & Use Tax Guide (single-article rules may apply). Sales & Use Tax Guide
SaaS / Remotely Accessed Software	Yes	Access from TN is taxable; collect 7% + local. RAS-1; Notice 15-14
Specified digital products (e-books, music, video)	Yes	7% state + 2.5% standard local. SUT-65
Shipping / delivery / handling	Yes, when the sale is taxable	Delivery charges are included in “sales price”; if the item is exempt, the delivery charge is exempt. SUT-23; Sales & Use Tax Guide
Single-article caps	Special rules	Local tax applies only on first $1,600; state single-article 2.75% applies $1,600–$3,200. SUT-6

Allocation tip for mixed shipments: If a shipment combines taxable and exempt items, allocate delivery charges to the taxable portion (e.g., by price or weight) to determine the taxable delivery charge. See examples in the Sales & Use Tax Guide and SUT-23.

Who Must Register and Collect Tennessee Sales Tax?

You must register and collect if you have:

Physical nexus in Tennessee (e.g., office, employees, inventory), or
Economic nexus: $100,000 in sales to Tennessee customers in the previous 12 months.
Source: Out-of-State Dealers & Marketplace Facilitators

Marketplace facilitators: Required to collect and remit Tennessee tax if they make/facilitate >$100,000 in TN sales in the prior 12 months (effective 10/1/2020).
Source: Out-of-State Dealers & Marketplace Facilitators

Sourcing: Which Local Rate Do I Charge?

Remote/out-of-state sellers: Collect local tax based on the customer’s ship-to/delivery address in Tennessee (destination sourcing).
Source: Sales & Use Tax Guide
Note on direct mail (2024 change): The Tennessee Works Tax Act adopted destination sourcing for certain direct mail distributed to recipients outside TN; see details if you sell/promote direct mail.
Source: Important Notice 24-08

Filing & Due Dates

File & pay electronically via TNTAP.
Sources: Registration (TNTAP); TNTAP
Filing frequency: Monthly (most sellers), Quarterly or Annually as assigned by DOR.
Source: Due Dates & Tax Rates
Due date: 20th day of the month after the reporting period; Annual returns due January 20 (extended if weekend/holiday).
Sources: Due Dates & Tax Rates; SUT-9

How to Register for Tennessee Sales Tax

Determine nexus (physical presence or $100,000 economic nexus).
- Out-of-State Dealers & Marketplace Facilitators
Register online and obtain your sales tax account/certificate.
- Registration (TNTAP) • TNTAP
Charge the correct rate: 7% state + local (varies, up to 2.75%).
- Sales & Use Tax • Local Sales Tax
File returns on your assigned schedule; remit by the 20th.
- Due Dates & Tax Rates

FAQs: Tennessee Sales Tax

Is SaaS taxable in Tennessee?
Yes. If software is accessed from a location in Tennessee, the charge is taxable (remotely accessed software).
Sources: RAS-1 Overview; Important Notice 15-14

Are e-books, digital music, and streaming video taxed?
Yes. They are specified digital products taxed at 7% state + 2.5% standard local.
Sources: SUT-65; DOR PDF

Are shipping and delivery charges taxable?
Yes, when the sale is taxable. Delivery/handling/postage are part of “sales price”; if the sale is exempt, the delivery charge is exempt.
Sources: SUT-23; Sales & Use Tax Guide

What is the single-article rule?
Local tax applies only to the first $1,600 of a single article; the state imposes an additional 2.75% single-article tax on the portion $1,600–$3,200.
Source: SUT-6