How car sales tax works in Tennessee
Tennessee taxes a car in three parts. The 7% state rate applies to the full taxable price. The local rate (1.5% to 2.75%) applies only to the first $1,600, so it adds at most $44. A state single article tax of 2.75% applies to the part between $1,600 and $3,200, which adds another $44.
Example from the Department of Revenue: a $35,000 car in Nashville (2.25% local) pays $2,450 + $44 + $36 = $2,530.
- Trade-in credit: a separately itemized trade-in is subtracted before tax.
- Rebates do not reduce the tax. Tax is due on the price before the rebate. A dealer discount does lower it.
- The doc fee is taxable and is not capped.
- Private sales: taxed the same way, paid to the county clerk when you title the car.
- Family: sales and gifts between spouses, siblings, parents, children, grandparents and grandchildren are exempt.
- New residents: no tax if the car is already titled or registered in your name in another state.
Title and registration fees in Tennessee
| Fee | Amount |
|---|---|
| Title (including $8.50 clerk fee) | about $14 |
| Registration (standard passenger plate) | about $26.50 |
| Electric vehicle fee (through 2026) | + $200 |
| Electric vehicle fee (from 2027) | + $274 |
| Hybrid or plug-in hybrid fee | + $100 |
| County wheel tax | varies |
Many counties add a wheel tax to the registration, and some cities add their own. Check with your county clerk. The registration does not transfer with a used car, so the buyer registers it again.
Example: a $32,000 new car
Price $32,000.00, $1,000.00 manufacturer rebate, $8,000.00 trade-in and a $499.00 doc fee, bought from a dealer:
| Sales and use tax (7%) | $1,714.93 |
| Local tax (2.25% on the first $1,600.00) | ≈ $36.00 |
| State single article tax (2.75%) | $44.00 |
| Title fee | ≈ $14.00 |
| Registration fee | ≈ $26.50 |
| Total taxes | $1,794.93 |
|---|---|
| Total government fees | $40.50 |
| Out-the-door price | $33,334.43 |
| After the trade-in, you pay | $25,334.43 |
Common mistakes
- Applying the local rate to the whole price. In Tennessee it applies only to the first $1,600.
- Forgetting the state single article tax: 2.75% on the part of the price between $1,600 and $3,200, or $44 on most cars.
- Subtracting a manufacturer rebate before tax. Tennessee taxes the price before the rebate.
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