Tennessee car sales tax: rate, sourcing and what it applies to

• Tennessee's rate is not a single statewide number — it is resolved from the ZIP code you register in, because local jurisdictions add to the state rate. Across Tennessee the combined rate runs 9% to 9.75%, so where you register genuinely changes what you owe.
• The rate that matters is the one where you register the vehicle, not where the dealership sits. Buying out of your area does not change what you owe.

• Taxed on top of the vehicle price: the dealer doc fee, dealer-installed accessories and extended warranties and service contracts.
• Your trade-in comes off before tax is calculated.

• Registering the car: in Tennessee the dealer usually files your title and registration with the county clerk and collects the fees at the sale. A 60-day temporary tag covers you, and the clerk mails the plate. If you buy from a dealer outside your county, your own clerk may collect your wheel tax. The calculator includes the title, registration and county fees either way.
• Tennessee tax has three layers. The state charges 7% on the whole price. Your local tax, 2% to 2.75%, applies only to the first $1,600. A second state tax of 2.75% covers the next $1,600 and adds at most $44. A car over $3,200 pays at most $44 of local tax and $44 of single article tax on top of the 7%.
• The local rate follows where the dealer is located, not where you live. The calculator uses the rate for the ZIP you entered, which is right when you buy near home. Davidson County's rate is 2.75% since February 1, 2025 (2.25% plus a 0.5% transit surcharge). Portland's rate became 2.75% on August 1, 2026.
• In Hamblen County outside Morristown, local tax applies only to the first $300 of the price. In Hancock County it is the first $375. The calculator does not model that yet, so it overstates local tax there by up to about $36.
• Your trade-in reduces the taxable amount, on new and used cars, with no dollar limit. It has to be a like-kind trade, a vehicle for a vehicle, and the invoice has to list it by model and serial number. The credit cannot be more than the price of the car you buy.
• Manufacturer rebates are taxed: tax is figured on the price before the rebate. A discount the dealer gives from its own price does lower your taxable amount.
• The doc fee has no cap in Tennessee. It is taxed, and it is part of the car's price for the single article calculation.
• Service contracts, extended warranties and maintenance plans are taxed at the full state plus local rate, with no $1,600 limit, so 9% to 9.75%. GAP is not taxed when it is listed separately. The calculator's F&I box cannot tell them apart, so a GAP-only total reads about 7% too high in tax and a service contract is under-taxed by its local share.
• Accessories the dealer installs before the sale are part of the car's price. A dealer may also pass its own business tax on to you as a separate line. That line is taxed too, and it is not a government charge.

Source: TN Department of Revenue — County Clerk Sales and Use Tax Guide for Automobiles & Boats · rules last verified Oct 11, 2026. Methodology.