Do contractors charge sales tax in Tennessee?
In Tennessee a contractor is treated as the CONSUMER of the materials they build into real property. That means the contractor pays sales tax when they buy the materials, and does not add sales tax to the customer's invoice for that work — the tax is already inside the price. Tennessee also has county, city or special-district rates on top of the state rate, so the rate depends on where the job site is, not where the contractor is based. Source: Tenn. Code §67-6-102; Tenn. Comp. R. & Regs. 1320-05-01-.27 (contractors are the consumers of materials used in realty improvement; installation and repair of tangible personal property is taxable).
| What | Tennessee |
|---|---|
| Contractor’s default role | Consumer of materials |
| What the charge is called | Sales Tax |
| Local rates on top | Yes — sourced to the job site |
| Capital improvement exempt to the customer | Yes |
Source
Tenn. Code §67-6-102; Tenn. Comp. R. & Regs. 1320-05-01-.27 (contractors are the consumers of materials used in realty improvement; installation and repair of tangible personal property is taxable).
Read the statute in the Tennessee Code (Tennessee General Assembly): capitol.tn.gov.
The linked sections open Justia’s free copy of the code, because the state’s own site has no stable address for each section.
This is a summary of a state’s published guidance, not tax or legal advice. Rates and rules change, local jurisdictions add their own, and the treatment of a specific job depends on the contract and the work. Check the citation and speak to a CPA or a state tax adviser before relying on it.
How Seayora uses this rule
Seayora resolves this rule on every invoice a contractor raises — per line, from the job site’s own address — and prints the rate, the jurisdiction and this citation on the document itself, so the estimate a customer accepts is the invoice they are billed. Where the rule is more nuanced than a single answer, Seayora refuses to guess a total rather than quoting a confident wrong one.
Guides on this rule
- Sales Tax Basics for Contractors and Service Businesses — When contractors charge sales tax: how states treat repairs, capital improvements and materials, what nexus means, and the exemption certificates to keep.
Compare this rule in every state
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The same question in other states
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii