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Tax Structure

Keeping Tax Rates Low

Tennessee has the second lowest state and local tax burden per capita and no income tax on wages. Combine that with some exceptional incentives from our economic development partners for relocating and expanding companies and your business is ready to grow in the Memphis region.

Tax Structure

There is not a Payroll (Occupational) Tax nor a
Head Tax for the City of Memphis or Shelby County.

Tennessee has no State Income Tax.

Local Taxes

Shelby County

$4.11 per $100 value

City of Memphis

$3.27 per $100 value

*Note: Memphis residents & businesses pay Shelby County rate plus city rate ($4.11 + $3.27 = $7.38).

Other Shelby Co. Municipalities

Arlington

$1.15 per $100 value

Bartlett

$1.83 per $100 value

Collierville

$1.63 per $100 value

Germantown

$1.97 per $100 value

Lakeland

$1.25 per $100 value

Millington

$1.53 per $100 value

All municipality taxes are in addition to Shelby County tax.

Residential

Memphis

25%

Shelby Co.

25%

Commercial &
Industrial Real

Memphis

40%

Shelby Co.

40%

Commercial &
Industrial Personal

Memphis

30%

Shelby Co.

30%

Shelby County

2.25%

Memphis

2.25%

Arlington

2.75%

Bartlett

2.75%

Collierville

2.75%

Germantown

2.75%

Lakeland

2.75%

Millington

2.75%

*In addition to 7.0% state sales tax.

Shelby County, including Memphis

Rate varies — 1/9 of 1% to 3/20 of 1%

14.25% (additional 5% added to 9.25% state + local sales tax rate)

Questions? Click here to email Mark Herbison or call 901-543-3516.

State Taxes

7.0% (added to local option sales tax, so total sales tax in Shelby Co. is 7.0% + 2.25% = 9.25%)
The state tax rate on food is 5%, expect for food purchased in restaurants.
The single article rate is 2.75% on any single item sold in excess of $1,600, not to exceed $3,200.


*Exemptions include industrial machinery, items bought for resale and manufacturers’ exemption for materials that become a component part of the finished product, containers, labeling and packaging; and materials coming into direct contact with the product and consumed in the manufacturing process. Numerous other exemptions – details available upon request.

There is no property tax in Tennessee.

6.5% on net income from business conducted in Tennessee
No Throwback Provision: Sales made outside of the State of Tennessee are not taxed

Equity Method: $0.25 per $100, or major fraction thereof, of the issued and outstanding capital stock, surplus and undivided profits; minimum $100


Book Value Method: $0.25 per $100 on book value of all real and tangible goods owned or used by the corporation in Tennessee. Same rate applies to finished goods inventory for distribution facilities, but caps at $30 million

Varies: The first $8,000 in wages paid to each employee are subject to this tax. The new employer premium rate for most industries, including manufacturing sector 31, is 2.7%. The rate is higher for construction (7.5%), mining and extraction (5.0%), manufacturing sector 32 (5.0%), and manufacturing sector 33 (6.5%). Minimum and maximum experience rates are 1.0% and 10.6%, respectively.

None on finished goods inventory.

No income tax on wages.

Taxable dividend and interest incomes are taxed at the rate of 6%. The first $1,250 on an individual return and the first $2,500 on a joint return are not taxed. Any person 65 years of age or older having a total annual income derived from any and all sources of $26,200 or less, or $37,000 or less for joint filers are completely exempt from the tax.

Phased out by 2022. The tax will decrease by 1% each year starting in 2017.

Questions? Click here to email Mark Herbison or call 901-543-3516.

Greater Memphis Chamber | 22 North Front Street Suite 200 | Memphis, TN 38103-2100 | 901-543-3500
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