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Tennessee Consumer Tax Laws

The taxes charged on consumer purchases are controlled by state consumer tax laws. Normally, states will charge higher consumer taxes for goods or services that are either unhealthy or not considered essential, such as alcohol, tobacco, and gambling. While the majority of gasoline taxes go to fund highway construction and maintenance, the remainder of sales tax revenue goes into a state's general fund. In Tennessee’s case, a portion is allocated for commercial development districts.

Consumer Tax Statutes in Tennessee

Consumer tax laws can vary from state to state. Tennessee’s consumer tax laws are highlighted in the table below.

Sales Tax

7% 67-6-202

Cigarette Tax

10 mills per cigarette plus 0.05¢/pack for dealers or distributors

Gasoline Tax per Gallon

20¢ 67-3-1301

Use Tax

7% 67-6-209

Liquor Tax

Beer $4.29 per barrel; Wine $1.21/gal.; Spirits $4.40/gal. §§57-3-302; 57-5-201

Gambling Tax

NA

(Here the term "mills" means one one-thousandth of a dollar, so 10 mills = 10 one-thousandths of a dollar, or .01.)

As consumers, we are purchasing more and more goods online, and them from anywhere in the world. And it’s hard not to think you’re getting those items free of Volunteer State sales tax. Tennessee law, however, requires you to pay a “use tax” for any goods or services delivered into or used in Tennessee if the out-of-state vendor hasn’t already charged their own state sales tax. Like most states, Tennessee ties their use tax rate to the normal consumer sales tax rate at 7 percent. To make sure you’re abiding by Tennessee’s use tax, make sure you pay:

  • If you purchase taxable property or services by phone, from catalogs, or on the Internet, and the property or services are delivered into Tennessee;
  • If you purchase taxable property from a seller who is located outside of Tennessee and the property is delivered into or used in Tennessee; or
  • If you send or take property out of Tennessee, have a taxable service performed on that property, and then have the property shipped or bring it back into Tennessee.

Tennessee Consumer Tax Laws: Related Resources

Tax laws can be complicated for trained attorneys to understand, let alone the layperson. For more information and resources on this topic, you can visit FindLaw’s sections on Tennessee Tax Laws and Tax Laws and Forms. You can also contact a Tennessee tax attorney if you would like legal assistance with a consumer tax matter.

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