Credit card processing and merchant services in Tennessee
Tennessee taxes most sales at 7% plus a local rate, with special math for single items over $1,600. In 2021 the Attorney General warned merchants to disclose card fees before customers pay.
Card surcharges
Surcharging allowedNo Tennessee surcharge statute we've found; network caps apply, and fees must be disclosed before the customer pays.
Sales tax
7% state rate, plus local
Last checked
October 6, 2026
Tennessee's general state sales tax rate is 7%, food and food ingredients carry a 4% state rate, and local governments add their own rate on top, up to 2.75%. Then comes the single article rule, which needs its own setup in your POS. In most local jurisdictions, local tax applies only to the first $1,600 of the price of any single item, and a separate 2.75% state single article tax applies to the part of the price between $1,600 and $3,200.
Here's how that works on a $4,000 item in a county with a 2.25% local rate. State tax is 7% of the full price, or $280. Local tax is 2.25% of the first $1,600, or $36. The single article tax is 2.75% of the next $1,600, or $44. The total is $360, not the $370 you'd get by applying 9.25% to the whole price. Furniture, appliance and equipment sellers should test this before they open.
Tennessee has no surcharge statute that we've found, so the card network caps apply: 3% or your cost for Visa, 4% or your cost for Mastercard, and nothing on debit or prepaid cards. The Attorney General's office has added a warning of its own. In a February 2021 release, it said merchants must not hide differences between credit card, debit card and cash prices, and that failing to clearly disclose the full charge, fees included, before a customer pays may violate the state's law against deceptive or false advertising.
Our Nashville page covers Davidson County's 9.75% rate and the grocery rate change coming November 1, 2026. Across Tennessee, Clearo prices on interchange-plus with no long-term contract, and a free statement review shows what you pay now.
What Tennessee merchants should know
Tennessee sales tax rates
Tennessee's sales tax has a state portion and a local portion. The general state rate is 7%, food and food ingredients are taxed at a 4% state rate, and prepared food is taxed at the general 7% state rate plus the local rate. Local rates vary by county and city and can't exceed 2.75%.
Sources: Tennessee Department of Revenue, Sales and use tax; Tennessee Department of Revenue, SUT-13: Sales and use tax rates overview; Tennessee Department of Revenue, SUT-54: Prepared food, definition and tax rate
The single article rule
In most local jurisdictions, local tax applies only to the first $1,600 of the sales price of any single article of tangible personal property. A state single article tax of 2.75% applies to the part of the price between $1,600 and $3,200. Above $3,200, only the state rate applies.
If you sell big-ticket items, make sure your POS splits the tax this way.
Source: Tennessee Department of Revenue, Single article and special tax rates
Credit card surcharges and disclosure
We haven't found a Tennessee statute that bans or caps credit card surcharges, and the 2016 NCSL table lists none. The card network rules apply: up to 3% or your merchant discount rate on Visa credit, with 30 days' notice to your acquirer; up to 4% or your average effective rate on Mastercard credit; nothing on debit or prepaid cards; and disclosure at the entrance, at checkout and on the receipt.
In a February 2021 release, the Attorney General's office warned that merchants must not mislead customers, for example by advertising a lower price than they charge or hiding differences between credit card, debit card and cash prices, and that failing to disclose the full price before payment may violate Tennessee's deceptive advertising law.
Sources: Tennessee Attorney General, AG Slatery warns against deceptive credit card surcharges (February 12, 2021); National Conference of State Legislatures, Credit or debit card surcharges statutes (2016 table); Visa, U.S. Merchant Surcharge Q and A (PDF); Mastercard, Merchant surcharge rules (US)
Payment services we provide
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Common questions
Can Tennessee businesses add a credit card surcharge?
Yes. We haven't found a Tennessee statute that limits surcharges, so Visa's cap of 3% or your merchant discount rate and Mastercard's cap of 4% or your average effective rate apply. In 2021 the Attorney General warned that failing to disclose fees clearly before payment may violate the state's deceptive advertising law, so post the fee where customers see it before they pay.
How does Tennessee's single article rule work?
In most places, local sales tax applies only to the first $1,600 of a single item, and a 2.75% state single article tax applies to the slice between $1,600 and $3,200. The 7% state rate applies to the whole price. On a $4,000 item where the local rate is 2.25%, the total tax is $360 rather than $370.
What sales tax applies to groceries in Tennessee?
Food and food ingredients carry a 4% state rate plus the local rate. Prepared food is taxed at the full 7% state rate plus local tax. Davidson County is cutting its local rate on food and food ingredients to 1.75% from November 1, 2026; our Nashville page has the details.
Is it OK to post one price and charge more for cards?
Only if customers are told before they pay. The Attorney General's 2021 release warned merchants not to hide differences between credit, debit and cash prices or advertise a lower price than they charge, and card network rules require notice at the entrance and the point of sale. Our post on dual pricing vs surcharging covers both setups.
Which Tennessee cities do you cover?
Our Nashville page covers Davidson County's rates and its November 2026 food tax change, our Memphis page covers the city's 9.75% rate, our Knoxville page covers the city's 2025 sales tax vote, and our Chattanooga page covers city and county business licenses and how city sales are reported. Our Clarksville page covers tax setup for new businesses, and our Murfreesboro page works through the single article rule on big-ticket sales. We work with businesses anywhere in Tennessee remotely, with a dedicated rep, interchange-plus pricing and no long-term contract.
Other states we serve besides Tennessee
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Disclaimer: general information, not professional advice
This page is general educational information, not legal, tax, accounting or financial advice. Rules and rates vary by place and change, so confirm them with the official source and a qualified professional before you act. Full terms are in our Terms of Service.
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