Credit card processing and merchant services in Knoxville, TN
Knoxville's local sales tax rate had been 2.25% since 1989 when the city put a half-cent increase to voters in November 2025. Look up the rate for your address before you set your POS.
Knoxville's local sales tax went to the ballot in 2025. According to the City of Knoxville, the local option rate had been 2.25% since 1989, and the city put a proposal to voters on November 4, 2025 to raise it to 2.75% inside city limits. Add Tennessee's 7% state rate and that's the difference between 9.25% and 9.75% on most sales. Before you set up a register, check your address on the Department of Revenue's local sales tax rate map and use the rate it shows.
On big-ticket items the difference is smaller than it looks, because of Tennessee's single article rule. In most local jurisdictions, local tax applies only to the first $1,600 of a single item, and a 2.75% state single article tax covers the slice between $1,600 and $3,200. So a half-cent change in the local rate can move the tax on any one item by $8 at most. On a $2,500 appliance, the tax is $235.75 at a 2.25% local rate and $243.75 at 2.75%.
Food needs its own code either way. Tennessee taxes food and food ingredients at a 4% state rate plus the local rate, while prepared food carries the full 7% plus local, so a grocery or convenience store needs at least two tax codes. The Census Bureau estimated Knoxville's population at 202,021 in July 2025, up 6.0% since 2020.
On card fees, Tennessee has no surcharge statute we've found, but in 2021 the Attorney General warned merchants not to hide differences between card and cash prices. Our Tennessee page has the details. If you'd rather lower your costs than add a fee, interchange-plus pricing shows each card's interchange at cost, our POS terminals take chip and tap, and a free statement review shows what you pay today.
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Common questions
What sales tax rate should a Knoxville business charge?
Look up your address on the Department of Revenue's local sales tax rate map before you set your POS. Knoxville's local option rate had been 2.25% since 1989, or 9.25% with the state's 7%. In November 2025 the city asked voters to raise the rate inside Knoxville to 2.75%, which would make 9.75%.
How does the single article rule change the tax on a big purchase in Knoxville?
In most local jurisdictions, local tax applies only to the first $1,600 of a single item, and a 2.75% state single article tax covers the next $1,600. The 7% state rate applies to the whole price. A $2,500 item carries $235.75 at a 2.25% local rate, and a half-cent local increase adds no more than $8 to any one item.
Do Knoxville grocery stores need separate tax codes?
Yes. Food and food ingredients carry Tennessee's 4% state food rate plus the local rate, while prepared food is taxed at the full 7% state rate plus local tax. Set up at least two codes, and confirm the local rate for your address before you do.
Do I need to register before adding a credit card surcharge in Knoxville?
Not with the state, since Tennessee has no surcharge statute that we've found. Visa wants 30 days' notice to your acquirer, and Mastercard says it isn't currently requiring merchants to register their intent to surcharge. Because of the Attorney General's 2021 warning, make sure customers see the fee before they pay.
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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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