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Sales & Use Tax

Sales & Use Tax

The sales and use tax in Tennessee is 7% plus the applicable local rate (2%) on any person or company who manufactures, distributes or sells tangible personal property within the state. 

No sales tax is levied on:

  • Purchases, installation and repairs of qualified industrial machinery.
  • Raw materials for processing.
  • Certified pollution control equipment for manufacturers.
  • Machinery and equipment used for the production of electricity using clean energy technology including geothermal, hydrogen, solar and wind sources.
  • Material handling and racking systems for qualified warehouse and distribution facilities purchased during the 3 year investment period.
  • Computer equipment, peripheral devices and software purchased for a qualified data center with an investment of $250 million during the investment period.
  • Reduced sales tax rates for manufacturers' use of energy fuel and water (1.5% vs. 7%).
  • Qualified industrial supplies.
  • Items purchased for resale.
  • Containers, packaging and wrapping materials.
  • Additional exemptions or credits may be available.