Skip to main content
Avalara Help Center

How Does the Tennessee Tiered Tax Work?

Overview

I see one of my transactions has Tennessee tiered taxing.

Environment

Avalara Avatax

Resolution

To verify:

  1. On the Transactions tab, locate the transaction.
  2. Click the Transaction to see more detail.
  3. Click the Edit button.
  4. Select the Lines tab.
  5. Click on the icon with the paper and the pencil for one of the lines showing this issue.
  6. The Quantity field is on this page.

 

An example of the Tennessee tax cap for a single item is listed below:

  • State tax rate of 7% is applicable to all amounts.
  • Local tax rate between 2.25% and 2.75% is applicable between $0-$1600 for all items. (This rate is dependent on the local city or county rate.)
  • State single article tax rate of .0275% is applicable for all single items between $1600-$3200.

TNtaxcap.png

  • Single item sold for $4000 to Nashville
    • State tax: $4000 x .07 = $280
    • Local tax: $1600 x .0225 = $36
    • Single Article tax: $1600 x .0275 = $44
    • Total tax: $360
  • Two items sold for $2000 each to Nashville
    • State tax: 2 * ($2000 x .07) = $280
    • Local tax: 2 * ($1600 x .0225) = $72
    • Single Article tax: 2 * ($400 x .0275) = $22
    • Total tax: $374How Does the Tennessee Three Tiered Tax Work?