Tennessee Sales Tax on Digital Products (2026)

Last reviewed: August 15, 2026 — tax law changes; verify with the Tennessee Department of Revenue

Selling ebooks, courses, music, or software to buyers in Tennessee? As of August 2026, Tennessee taxes "specified digital products" — digital books, digital audio, and digital video, whether downloaded or streamed — at a flat 9.5% statewide, and it taxes downloaded software and SaaS on top of that under separate rules.

The quick answer

Yes — Tennessee taxes digital products. The sale, lease, licensing, and use of "specified digital products" — digital audio-visual works, digital audio works, and digital books — is subject to Tennessee sales and use tax, per the Department of Revenue's SUT-65 guidance. The definition turns on electronic transfer, which the Department reads broadly: downloading, podcasting, streaming, and accessing online all count. A subscription your buyer never downloads is taxed the same as a permanent download.

The rate is unusual. Instead of the buyer's ordinary local rate, specified digital products are taxed at the 7% state rate plus a standard 2.5% local rate — a flat 9.5% no matter where in Tennessee the buyer sits (SUT-65). Software runs on separate rails: downloaded prewritten software and remotely accessed software (SaaS) used in Tennessee are both taxable, at 7% plus the applicable local rate, per the Department's RAS-1 guidance. Video game digital products are taxable under their own provision (SUT-63).

What's taxable and what isn't

The table summarizes Tennessee's general treatment by category as of August 2026, built around the three "specified digital products" categories in SUT-65 and the Department's software guidance. Classification of an individual product is ultimately the Department's call, not ours.

One statutory nuance worth knowing: secondary references note that a specified digital product is exempt in Tennessee when the sale of its tangible equivalent would be exempt (see SalesTaxHandbook's Tennessee reference). That carve-out is narrow in practice — most consumer digital goods have taxable physical equivalents — but it matters for edge cases, so check before assuming it applies to you.

Rates: 7% state plus a special local rate

Tennessee's general sales tax framework is a 7% state rate plus a local option rate that varies by county and city but may not exceed 2.75%, per the Department's due dates and tax rates page. For digital sellers, three rate rules matter as of August 2026:

• Specified digital products: a flat 9.5% statewide. The total sales price is subject to the 7% state rate plus a standard 2.5% local rate that applies instead of the local rate in effect where the buyer is located (SUT-65). An ebook buyer in Memphis and one in a low-rate rural county both pay 9.5%.
• No single-article cap for digital products. Tennessee normally applies local tax only to the first $1,600 of a single article's price, but the entire sales price of specified digital products is subject to the local tax, per the Department's single article and special tax rates page.
• Software: 7% plus the actual local rate. Downloaded software and remotely accessed software (SaaS) are taxed at the state rate plus the applicable local rate — up to 9.75% combined depending on the jurisdiction — per RAS-3.

SaaS with users in several states gets its own relief valve: when a customer's users are split between Tennessee and other states, the Department's RAS-4 guidance lets the seller collect on the portion of the price corresponding to Tennessee users, with the customer providing a direct pay permit or exemption certificate for the rest. That mostly matters for B2B sales; for consumer sales, the buyer's Tennessee location controls.

Economic nexus: when remote sellers must register

Since South Dakota v. Wayfair (2018), states can require out-of-state sellers to collect based on sales volume alone. Tennessee's rule, per the Department's out-of-state dealers and marketplace facilitators page: an out-of-state dealer with no physical presence in Tennessee must register and collect once it makes $100,000 or more in sales to Tennessee customers during the previous 12-month period. The $100,000 threshold has been in effect since October 1, 2020, when it was lowered from $500,000.

Three details are easy to miss. First, there is no transaction-count prong — unlike many states, 200 small sales alone do not create Tennessee nexus; only the dollar figure matters. Second, the threshold counts all retail sales, including exempt sales, though sales for resale are excluded. Third, the measurement period is a rolling 12 months, not a calendar year — so a strong launch can push you over mid-year. If you are near the number, check your trailing twelve months, not just year-to-date.

Marketplace facilitator rules

Since October 1, 2020, marketplace facilitators that make or facilitate more than $100,000 in sales to Tennessee customers in the previous 12-month period must collect and remit Tennessee sales tax on the sales they facilitate, per the same Department page. If you sell through a registered marketplace, the platform collects Tennessee tax on those sales — and an out-of-state marketplace seller is not required to register at all if every one of its taxable Tennessee sales runs through a facilitator that is collecting and remitting. The catch is the word all: sales from your own website are not marketplace sales, so once you cross the nexus threshold, collecting on your direct sales is your job. Keep records of marketplace versus direct sales, and confirm what each platform actually collects.

Registering and filing

If you must collect Tennessee sales and use tax, you register through the Tennessee Taxpayer Access Point (TNTAP) at tntap.tn.gov/eservices, the Department's online portal for registration, filing, and payment; the Department's registration page has the details. All sales and use tax returns and payments must be submitted electronically. Returns are due the 20th of the month following the end of the reporting period, whether you are assigned a monthly, quarterly, or annual schedule, per the due dates and tax rates page. Sellers registered through the Streamlined Sales Tax central registration system with no Tennessee location may instead file the simplified electronic return the Department accepts for Streamlined registrants.

The multi-state picture

Tennessee's flat 9.5% only answers for Tennessee buyers. If you sell nationwide, at least 41 states plus DC tax some form of digital goods, each drawing the lines differently — our state-by-state guide maps the landscape, and the Digital Seller's Sales Tax Checklist condenses the compliance steps into a printable two-pager. SurcoPay's built-in tax tooling applies the right treatment per state at checkout and tracks your sales against each state's nexus threshold.

FAQ

Does Tennessee charge sales tax on digital products?

Yes. Tennessee taxes specified digital products — digital audio-visual works, digital audio works, and digital books — whether they are downloaded, streamed, or accessed online, at the 7% state rate plus a standard 2.5% local rate (9.5% total statewide), per the Department of Revenue's SUT-65 guidance. Downloaded prewritten software and remotely accessed software (SaaS) used in Tennessee are also taxable. Not tax advice; verify with the Tennessee Department of Revenue.

What tax rate applies to digital products in Tennessee?

Specified digital products are taxed at a flat 9.5% everywhere in Tennessee — the 7% state rate plus a standard 2.5% local rate that applies instead of the jurisdiction's ordinary local rate. Software is treated differently: downloaded software and remotely accessed software (SaaS) are taxed at the 7% state rate plus the applicable local rate, which can run up to 2.75% depending on the jurisdiction.

What is Tennessee's economic nexus threshold?

$100,000 or more in retail sales to Tennessee customers during the previous 12-month period, in effect since October 1, 2020. There is no transaction-count prong. The threshold counts all retail sales, including exempt sales, but excludes sales for resale. Marketplace facilitators that cross the same $100,000 mark must collect and remit on behalf of their sellers.

Sources

Official Tennessee Department of Revenue publications relied on for this guide, with the secondary references used to cross-check them listed last:

• SUT-65 — Specified Digital Products (the three categories with examples; electronic transfer including downloading, podcasting, streaming, and accessing online; 7% state rate plus the standard 2.5% local rate)
• Tennessee DOR — Sales Tax on Specified Digital Products (PDF) (taxpayer education presentation on the specified digital products rules)
• SUT-63 — Video Game Digital Products, Overview (taxability of video game digital products)
• RAS-1 — Remotely Accessed Software, Overview, RAS-3 — Determining the Tax Rate, and RAS-4 — Users in Tennessee and Other States (SaaS taxability, rates, and multi-state apportionment)
• Tennessee DOR — Out-of-State Dealers and Marketplace Facilitators ($100,000 economic nexus threshold over the previous 12 months; October 1, 2020 effective date; marketplace facilitator collection duty and marketplace seller relief)
• Tennessee DOR — Due Dates and Tax Rates (7% state rate; 2.75% maximum local rate; filing due dates) and Single Article and Special Tax Rates (entire sales price of specified digital products subject to local tax)
• Tennessee DOR — Sales and Use Tax Registration and TNTAP — Tennessee Taxpayer Access Point (registration and electronic filing portal)
• Secondary cross-checks: SalesTaxHandbook — Are Software and Digital Products Taxable in Tennessee? and Numeral — Tennessee Economic Nexus

Keep reading

• Do You Need to Collect Sales Tax Selling Digital Products? A State-by-State Guide
• The Digital Seller's Sales Tax Checklist (free download)
• Maryland Sales Tax on Digital Products (2026)
• South Carolina Sales Tax on Digital Products (2026)
• Platform Fee Calculator