Tennessee Sales Tax Exemptions / Tax Free Items Tennessee: Sales Tax Handbook

Tennessee:

What purchases are exempt from the Tennessee sales tax?

While the Tennessee sales tax of 7.00% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Tennessee.

Sales Tax Exemptions in Tennessee

In Tennessee, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Several examples of items that are considered to be exempt from Tennessee sales tax are medical supplies, certain groceries and food items, and items which are used in the process of packaging.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Tennessee:


Clothing

  7.%

Groceries

  5%

Prepared Food

  7.%

Prescription Drugs

  7.%

OTC Drugs

  7.%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in Tennessee? Candy IS considered a grocery in Tennessee
Is soda taxable in Tennessee? Soda IS considered a grocery in Tennessee

Are services, shipping, installation, etc taxable in Tennessee?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Tennessee sales tax see the Tennessee sales taxability FAQ page.


Other tax-exempt items in Tennessee

This table lists a number of additional categories of goods and services that are exempt from Tennessee's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Tennessee.

Category Exemption Status
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT
Medical Goods and Services
Medical Devices EXEMPT
Medical Services EXEMPT
Newspapers and Magazines
Newspapers EXEMPT *
Periodicals EXEMPT *
Occasional Sales
General Occasional Sales EXEMPT *
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Pollution Control Equipment
General Pollution Control Equipment EXEMPT *
Services
Janitorial Services EXEMPT *
Transportation Services EXEMPT
Trade-Ins
General Trade-Ins EXEMPT

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/tennessee/sales-tax-exemptions