Find Local Tennessee Tax Relief Experts

Tennessee eliminated its Hall Income Tax on investment income in 2021, making it a no-income-tax state for individual wages and most investment income. The state sales tax is 7%, one of the highest statewide rates in the country; local counties and cities add up to 2.75%, creating combined rates as high as 9.75% in Memphis and Nashville. Tennessee applies its sales tax to most tangible goods and some services, with groceries taxed at a reduced rate of 4% plus applicable local taxes; businesses must file monthly or quarterly sales tax returns with the Department of Revenue. The Tennessee franchise and excise tax applies to most businesses at 0.25% of net worth or property value (franchise) and 6.5% of net earnings (excise); LLCs and corporations alike must pay both components. Payroll taxes in Tennessee are limited to federal obligations and state unemployment insurance (SUI) at rates from 0.01% to 10% based on employer experience; there is no state income tax withholding for employees. Back tax problems for Tennessee individuals are primarily federal IRS issues; Tennessee's large population of self-employed contractors, musicians, healthcare workers, and real estate investors often underpay federal estimated taxes. The franchise and excise tax catches many business owners off guard: LLCs that were unaware of Tennessee's entity-level tax face back taxes, penalties, and interest upon audit. Tennessee offers installment payment plans and an informal review process before the Tennessee State Board of Equalization for disputed assessments.