2024 Guide to Sales Tax in Nashville, Tennessee

What is the Sales Tax in Nashville?

Nashville has a combined sales tax rate of 9.25%. The breakdown is as follows:

• The Tennessee state sales tax rate: 7.00%
• A Davidson County sales tax rate: 2.25%
• Nashville city sales tax rate: 0.00%
• Special sales tax rates: 0.00%

What is Davidson County Sales Tax?

Davidson County imposes a sales tax rate of 2.25%, which is added to the state rate. This makes the total sales tax rate in Nashville 9.25%.

Tax Rates in Nashville, Tennessee

Curious about the variation in sales tax rates in Nashville? Here’s a breakdown of the sales tax rates for the top 10 zip codes in Nashville:

Other Tax Rates for Nashville

In addition to the main tax rates, here are some other tax rates that might apply to your business in Nashville:

What Items are Taxable in Nashville?

In Tennessee, not all items are subject to sales tax. For example, certain groceries and medical products may be exempt. To ensure you’re charging the correct tax, consider adding a Tax Information Code (TIC) to each item you sell. A TIC is a unique identifier that categorizes goods or services.

Here are some examples of taxable items in Nashville:

What Items are Exempt from Taxes in Nashville?

Tennessee exempts several items from sales tax to encourage their purchase or because they are deemed essential. To avoid mistakenly charging tax on exempt items, apply a Tax Information Code (TIC) to each of these products.

Here is a list of some tax-exempt items in Nashville:

Who Needs to Collect Sales Tax in Nashville?

Businesses must collect sales tax in Nashville if they have either a physical presence (nexus) or an economic nexus in Tennessee.

What is Physical Nexus in Tennessee?

Physical nexus in Tennessee means that your business has some kind of physical presence in the state. This can include having an office, warehouse, employees, or a significant amount of inventory within the state.

What is Economic Nexus in Tennessee?

If your business doesn’t have a physical presence in Tennessee, you can still be required to collect sales tax if you exceed the economic nexus threshold. This is defined as making $100,000 in sales or 200 transactions in the state within a year.

How you qualify for economic nexus in Tennessee (full details):

• Count all sales into Tennessee, including wholesale transactions, toward your $100,000 sales threshold or 200 transactions.
• Sales made through a marketplace where the facilitator collects tax on your behalf do not count toward the threshold.
• Once you reach the threshold, you must register for sales tax in Tennessee and begin collecting and remitting the appropriate taxes.

How to Get a Sales Tax Permit in Nashville?

If your business meets the physical or economic nexus criteria, you’ll need to obtain a sales tax permit in Tennessee. This process is simple and free.

Here are the steps:

1. Visit the Tennessee Department of Revenue website.
2. Complete the online registration form with details about your business.
3. The system will identify the necessary permits and register you for them.
4. You’re all set!

For more information, refer to the Tennessee Department of Revenue’s Sales Tax website.

How Do You Charge the Right Amount for Sales Tax in Nashville?

Ensuring you charge the correct sales tax in Nashville can be challenging due to potential rate changes and differing rates across regions. Here’s how to stay compliant:

1. Manually update rates: Keep track of changes by regularly checking the Tennessee Department of Revenue’s website. This approach requires updating your ecommerce platform frequently to ensure accurate tax rates.
2. Use sales tax software: Automate the process with sales tax compliance software like TaxCloud. These tools update rates automatically across all jurisdictions, saving you time and reducing errors.

How Do You File and Remit Sales Tax in Nashville?

Do you need to file sales tax returns specifically for the city of Nashville or Davidson County? No, you don’t. If you have sales tax nexus in Tennessee, you collect sales taxes from across the state and file a single state-wide return. The Tennessee Department of Revenue will process the returns.

If filing Tennessee sales taxes is time-consuming for you, TaxCloud can help. Our platform automates the entire sales tax management process, from tracking nexus and registering for sales tax to filing returns. With TaxCloud, you can focus on growing your business while we handle your sales tax compliance.

Learn how TaxCloud can simplify sales tax for your business.