How the single article rule works
Tennessee treats a vehicle as a single article: the 7% state rate applies to the whole price, the local option rate applies only to the first $1,600, and an extra 2.75% state tax applies to the second $1,600.[1] The Department of Revenue's own example is a $20,000 car sold in Davidson County: $1,400 of state tax, $36 of local tax at 2.25% and $44 of single-article tax, $1,480 in all.[1]
| Case | Tax | Share of price |
|---|---|---|
| Department of Revenue example: $20,000 | $1,480.00 | 7.40% |
| $30,000 car, $6,000 trade | $1,760.00 | 5.87% |
| $45,000 truck, $15,000 trade, 2.75% local | $2,188.00 | 4.86% |
| $2,500 used car | $235.75 | 9.43% |
Trade-ins and rebates in Tennessee
- Trade-in: tax is computed on the difference between the price and the credit given for a trade of like kind.[1]
- Rebates: sales tax is assessed on the full price before the rebate.[1]
- Moving to Tennessee: tax paid to your old state is credited; you owe only any difference.[1]
Why the local tax is so smallBecause local tax stops at $1,600, the city or county part on a car is at most about $44 at a 2.75% rate, no matter how expensive the car is.
Compare states on the car sales tax calculator, include the tax in a budget with the car affordability calculator, or see the yearly total on the cost of owning a car calculator.
Frequently asked questions
What is the sales tax on a car in Tennessee?
7% of the price after trade-in, plus local tax on the first $1,600 and 2.75% state single-article tax on the next $1,600.
What is the single article tax in Tennessee?
An extra 2.75% state tax on the portion of a single item's price from $1,600.01 to $3,200, at most $44.
Does Tennessee tax the rebate on a new car?
Yes. The tax is on the price before the rebate.