Key figures
Tennessee receivables
2026, with sources
A high combined rate that reaches software
Tennessee’s state sales tax is 7%, among the highest in the country, and counties and cities add local rates on top. It taxes computer software whether delivered on a disk, downloaded, or accessed remotely, so SaaS sold to Tennessee customers is taxable.
The Department of Revenue applies a “true object” test to mixed offerings. If the customer is really buying the software, the whole subscription is taxable. If the customer is really buying a service that happens to run on software, the charge can be nontaxable.
Remote sellers: a rolling 12 months
An out-of-state dealer must register once its retail sales into Tennessee exceed $100,000 over the previous 12 months, counting exempt sales but not sales for resale. There is no transaction-count test.
Example: a Delaware SaaS company billing Tennessee customers $10,000 a month passes $100,000 in month eleven. It registers with the Department of Revenue, charges 7% plus the local rate at each customer’s location, and files returns every period afterwards, even in periods with no sales.
Deadlines
- 20th of the month after the periodSales and use tax return
The federal baseline
This page covers what Tennessee adds. The federal rules underneath it apply here too.
Common questions
Is our SaaS taxable in Tennessee?
Yes. Tennessee taxes computer software, including software accessed remotely by customers in the state, and the Department’s rulings apply a “true object” test: if the real object of a subscription is the software, the whole charge is taxable. A service that merely uses software in delivering a nontaxable service, such as outsourced business processing, can fall outside it.
How does Tennessee measure the $100,000?
Tennessee looks at retail sales into the state over the previous 12 months, including exempt sales but not sales for resale, and requires registration once they exceed $100,000. There is no transaction-count test. A remote seller checks the threshold at the end of each month on a rolling basis.
Receivables next door
- ALAlabama receivablesAlabama layers 200-plus state-administered local taxes and self-administered cities on its state sales tax; remote sellers past $250,000 can collect a flat 8% through SSUT, and SaaS taxability is unsettled.
- ARArkansas receivablesArkansas nexus is $100,000 or 200 taxable transactions. It taxes digital goods but generally not SaaS, at 6.5% state plus city and county tax.
- GAGeorgia receivablesGeorgia’s rate is 4% plus local option taxes, remote sellers register at $100,000 or 200 sales, and electronically delivered software and SaaS are generally not taxable.
- KYKentucky receivablesKentucky charges a flat 6% with no local sales tax, taxes SaaS as a prewritten computer software access service, and since August 1, 2026 requires remote sellers to register on $100,000 of gross receipts alone.
- MOMissouri receivablesMissouri’s economic nexus is $100,000 in taxable sales with no transaction test, and by regulation SaaS is not taxable. The state rate is 4.225% before local taxes.
- MSMississippi receivablesMississippi charges 7% plus some local taxes, requires remote sellers to register above $250,000 in 12 months, and since July 2023 does not tax software hosted outside the state and accessed over the internet.
- NCNorth Carolina receivablesNorth Carolina’s rate is 4.75% plus county and transit tax, remote sellers register at $100,000 of gross sales with a 60-day lag from July 2026, and remotely accessed SaaS is not taxed.
- VAVirginia receivablesVirginia doesn’t tax SaaS or other software delivered over the Internet. Sales tax runs 5.3% to 7% by locality, and remote sellers register at $100,000 or 200 transactions.
Founder guides on this
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
- RevenueDeferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.
- StripeHow to reconcile Stripe payouts to your booksA Stripe payout is charges less fees, refunds and disputes, batched across days. How to book it gross, tie it to the bank, and keep revenue right.
More of the Tennessee guide
- AccountingAccounting and state tax in TennesseeCorporate tax, conformity to federal rules, apportionment and what it does to your books
- PayablesPayables and contractors in TennesseePaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in TennesseeWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in TennesseeRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in TennesseeCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.