How Are Businesses Taxed in Tennessee? Tennessee Business Taxes

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  • Tennessee State Taxes:

    • Corporate tax rates have been consistent and in effect since 1994.
    • Businesses need to pay state corporate income tax and federal corporate income tax.
    • The federal business tax has eight brackets based on income level.

  • Business Taxes in Tennessee:

    • State taxes include the following:
    • Business or gross receipts tax.
    • Sales and use tax.
    • Franchise tax.
    • Professionals tax.
    • LLCs benefit from pass-through taxation.
    • LLC owners must pay taxes on their portion of the income made from the LLC.
    • LLCs themselves do not pay federal income taxes, only their members do.

  • Tennessee Business Taxation Information:

    • The business tax is a privilege tax on the privilege of doing business by making sales of tangible personal property and services within Tennessee and its local jurisdictions.
    • Taxpayers multiply the gross sales derived from taxable sales per location by the appropriate state and local tax rates to calculate the amount of tax owed per location.

  • LLC Taxes in Tennessee:

    • Tennessee LLC tax includes franchise and excise taxes, local income taxes, sales tax, withholding taxes, employer’s state unemployment tax, and employer’s federal unemployment tax.
    • LLC owners will not pay state income tax, because there is none.
    • LLCs must pay federal and state corporate income taxes on their earnings.

  • Tennessee LLC Tax Compliance:

    • An LLC operating in Tennessee must be registered with the state department of revenue and is liable for any required franchise taxes.
    • Depending on the type of business, an LLC may also need to be registered with the county clerk for any local tax requirements.

  • Tennessee LLC Taxes Overview:

    • In Tennessee, LLCs themselves do not pay federal income taxes, only their members do.
    • Tennessee imposes a franchise tax and an excise tax on most LLCs.

  • Tennessee Sales and Use Taxes:

    • Tennessee’s state sales and use tax rate is 7 percent.
    • The state also has discretionary taxes at the county and city levels.
    • Tennessee taxes sales of various items and services.

  • Tax Exemptions and Credits in Tennessee:

    • Nonprofit entities in Tennessee may exempt some or all qualifying income from state and federal income taxes.
    • Small business owners may be eligible for tax credits or deductions.

  • Tennessee Taxpayers Information:

    • All incorporated Tennessee businesses should file at least an informational tax return with the Tennessee Department of Revenue.
    • Small businesses in Tennessee may have to pay property taxes on any real or personal property that they own or lease.

  • Tennessee Business Tax Filing:

    • Businesses need to pay state corporate income tax and federal corporate income tax.
    • Generally speaking, only general partnerships and sole proprietorships are exempt from certain taxes.

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