Credit card processing and merchant services in Nashville, TN
Davidson County's sales tax rose to 9.75% with the 2025 transit surcharge, and its grocery rate drops on November 1, 2026. Grocers need a tax code change that day; restaurants don't.
Nashville's sales tax changed in 2025 and changes again this November. Davidson County voters approved a 0.5% transit surcharge on November 5, 2024, which took the local rate to 2.75% on February 1, 2025, and the combined rate on most sales to 9.75%. The next change is for groceries: from November 1, 2026, food and food ingredients sold in Davidson County carry a reduced 1.75% local rate, on top of Tennessee's 4% state rate on food.
The November change applies only to food and food ingredients, not prepared food. A restaurant meal stays at 7% state plus 2.75% local. A grocery or convenience store needs its food tax code moved from 6.75% to 5.75% on November 1, 2026, with its prepared-food items left alone. Test both before the first sale that morning.
Big-ticket sellers have a different detail. In most local jurisdictions, Tennessee applies local tax only to the first $1,600 of a single item and adds a 2.75% state single article tax on the slice between $1,600 and $3,200. Under that rule, a $5,000 sofa sold in Nashville carries $438 in sales tax, not the $487.50 you'd get from 9.75% of the full price.
Nashville-Davidson added 9,244 residents between 2024 and 2025, for a July 2025 estimate of 721,074, according to the Census Bureau. If you're opening into that growth, card fees are the other setup question. Tennessee has no surcharge statute we've found, and the Attorney General has warned against hiding card price differences from customers. Clearo's interchange-plus pricing and free statement review help you decide with real numbers.
Rules that matter in Nashville
Food tax change on November 1, 2026
From November 1, 2026, the local sales tax rate on food and food ingredients sold in Davidson County drops to 1.75%. The reduced rate applies only to food and food ingredients; prepared food stays at the 7% state rate plus the full local rate.
The Department of Revenue's notice on the change explains how to report the reduced rate starting with the November 2026 return.
Sources: Tennessee Department of Revenue, Important notice: Davidson County food tax rate decrease (August 24, 2026); Tennessee Department of Revenue, Notice 26-19: Local sales tax on food and food ingredients, Davidson County (PDF); Tennessee Department of Revenue, SUT-54: Prepared food, definition and tax rate
Transit surcharge
Davidson County voters approved a 0.5% surcharge on the local option sales tax on November 5, 2024, to fund Metro Nashville's transit improvement program. It took effect February 1, 2025, raising the local rate to 2.75% and the combined general rate to 9.75%.
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Common questions
What is the sales tax rate in Nashville?
9.75% on most taxable sales: Tennessee's 7% plus Davidson County's 2.75% local rate, which includes a 0.5% transit surcharge in effect since February 1, 2025. Food and food ingredients are taxed at 4% state plus local, and that local rate drops to 1.75% on November 1, 2026.
What changes for grocery sales on November 1, 2026?
Davidson County's local rate on food and food ingredients falls to 1.75%, so groceries go from 6.75% to 5.75% in total with the 4% state rate. Prepared food doesn't change. Update your POS food tax code that day, and keep prepared items on the general rate.
How is sales tax worked out on expensive items in Nashville?
Tennessee's single article rule limits local tax to the first $1,600 of a single item in most places, and adds a 2.75% state single article tax on the portion between $1,600 and $3,200. Under that rule, a $5,000 item carries $438 in tax rather than $487.50. Make sure your POS applies it.
Does the FTC fee rule apply to Nashville venues and short-term rentals?
Yes, if you sell live-event tickets or short-term lodging. The FTC's Rule on Unfair or Deceptive Fees, in effect since May 12, 2025, requires those businesses to show the total price, including mandatory fees, up front. Get advice on how a card fee fits with that before you add one.
Can a Nashville business add a credit card surcharge?
Yes. Tennessee has no surcharge statute that we've found, so Visa's 3% and Mastercard's 4% caps apply, or your cost if lower, and debit cards are excluded. Disclose the fee before customers pay; the Attorney General warned in 2021 that hiding card price differences may violate the state's deceptive advertising law.
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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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