Minimum Business Tax

Minimum Business Tax

Reference Number: MTAS-1858
Reviewed Date: 11/30/2022

Revenue Class: Local Taxes

Fund: General

Account No.: 31810

Description: The business tax is levied in addition to all other privilege taxes and is intended by the legislature to be in-lieu-of any other ad valorem tax on “inventories of merchandise held for sale or exchange.” T.C.A. § 67-4-701 (b).

Authorization: T.C.A. § 67-4-701 et seq. (Business Tax Act)

Requirements or Restrictions: Businesses are required to file tax returns with the state on state subscribed forms.

Current Rate: A minimum of $22 annually is required for each taxpayer in classifications 1-4 and 5B ($450 annually for classification 5A) for each fixed place, location or outlet from which a business is operated. The state has established different classifications of businesses and gross receipt rates assessed to the different classifications. The classifications and rates are listed in detail in T.C.A. § 67-4-708 and T.C.A. § 67-4-709. The rates include a wide range of percentages. Some examples are:

  • 1/10 of 1 percent of all retail sales of the business for businesses classified under T.C.A. § 67-4-708 (1);
  • 1/40 of 1 percent of all wholesale sales of the business by people classified under T.C.A. § 67-4-708 (1)(A);
  • 3/80 of 1 percent of all wholesale sales of the business by people classified under T.C.A. § 67-4-708 (1)(B) and (1)(C), T.C.A. § 67-4-708 (2) and T.C.A. § 67-4-708 (3);
  • 1/20 of 1 percent of all retail sales of the business by people classified under T.C.A. § 67-4-708 (1)(D);
  • Transient vendors must pay a minimum tax of $50 for each 14-day period of business in a municipality, but they are not subject to the percent of the gross receipts portion of the tax. T.C.A. § 67-4-710 (a)(2).

The Tennessee Department of Revenue Business Tax Guide.

Frequency of Payment: Monthly. Due dates for different business classifications are listed under T.C.A. § 67-4-715.

Late Pay Penalty: N/A

Exemptions: Exemptions are listed under T.C.A. § 67-4-712. Businesses may deduct certain items from their gross receipts liability (listed under T.C.A. § 67-4-711). Certain credits are also allowed as listed in T.C.A. § 67-4-713.

Collection: State forwards municipality’s share monthly.

Use Restrictions: None.