You’re standing at a checkout counter on Beale Street, or maybe just grabbing a coffee in Midtown, and you glance at the receipt. You see that extra chunk of change tacked onto the price. It’s always there.
Most people in the Bluff City just shrug and pay it. But if you’re running a business or making a massive purchase—like a new truck or a whole suite of kitchen appliances—that little percentage matters. A lot. Honestly, the way the Memphis city sales tax is structured is kinda confusing because it’s not just one tax. It’s a layer cake of state, county, and city percentages that all pile up at the bottom of your bill.
The 9.75% Reality: Breaking Down the Stack
Let’s get the big number out of the way. If you buy a taxable item within the Memphis city limits, you are almost certainly paying 9.75%.
Wait, why is it so high? Well, it’s not just Memphis being greedy. Tennessee doesn’t have a state income tax on wages, so the government has to get its gas money from somewhere. That "somewhere" is your shopping cart.
Here is how that 9.75% actually breaks down in 2026:
- Tennessee State Sales Tax: 7.00%
- Shelby County Local Option: 2.25%
- Memphis City Tax: 0.50%
Basically, the state takes the lion's share, and the local jurisdictions split the rest. If you head just outside the city into an unincorporated part of Shelby County, you might see that rate drop slightly because the city-specific 0.50% isn't there, but for most of us living and working in the 901, 9.75% is the standard.
The "Single Article" Rule (The Secret to Saving on Big Buys)
This is the part that most people—even some long-time residents—totally miss.
Tennessee has this quirky thing called the Single Article Local Option Tax. It’s specifically designed so you don’t get absolutely hammered when buying expensive stuff like a car, a boat, or a high-end piece of farm equipment.
Here is the deal: the local portion of the sales tax (that 2.75% combined from the city and county) only applies to the first $1,600 of the purchase price.
Example: You buy a vintage Mustang for $30,000. You pay the full 7% state tax on the whole $30,000. But for the local Memphis/Shelby County tax? You only pay that 2.75% on the first $1,600. Everything from $1,601 to $30,000 is exempt from the local portion.
There’s a small "state single article tax" of 2.75% that kicks in on the price between $1,600 and $3,200, but after that, the extra percentages stop. It’s a huge relief if you’re dropping five figures on a purchase. If this rule didn’t exist, a $50,000 car would cost you nearly $5,000 in tax alone. Instead, it’s significantly less.
Why Your Grocery Bill Feels Different
You might have noticed that your milk and eggs aren't taxed the same as your Nikes.
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Tennessee is one of the few states that still taxes groceries, which is a point of heated debate in the state legislature every single year. However, they do give us a slight break. The state tax on "food and food ingredients" is lower—currently 4.00% instead of the usual 7.00%.
When you add the local Memphis and Shelby County taxes, you usually end up paying around 6.75% on groceries.
But be careful. The "grocery" definition is picky. If you buy a rotisserie chicken that’s hot and ready to eat, the state considers that "prepared food." Suddenly, you’re back up to the full 9.75%. Candy, soda, and dietary supplements also don't get the discount. Basically, if it’s "junk" or "ready-to-eat," the government wants the full cut.
Business Owners: The Compliance Headache
If you’re a business owner in Memphis, you’ve got a lot on your plate. You’re not just a merchant; you’re an unpaid tax collector for the Tennessee Department of Revenue.
You have to register for a sales tax permit through the Tennessee Taxpayer Access Point (TNTAP). It’s a $15 fee, which is cheap, but the paperwork is where it gets hairy.
- Filing Frequency: Most Memphis businesses file monthly. Your return and payment are due by the 20th of the following month. Miss that deadline? The penalty starts at 5% and can climb to 25%.
- Nexus: Even if you aren't physically in Memphis but sell enough to people who are in Memphis, you might have "economic nexus." This means you still have to collect and remit that 9.75%.
- Use Tax: This is the one that trips up everyone. If you buy equipment for your business from an out-of-state vendor who didn't charge you sales tax, you are legally required to pay "use tax" to Tennessee. It’s the same rate. The state essentially says, "If the seller didn't catch you, we will."
What Changed in 2026?
Heading into this year, there’s been a lot of talk about digital goods. The definition of what is taxable is expanding. Streaming services, certain software-as-a-service (SaaS) platforms, and even some digital downloads that used to sit in a gray area are now firmly in the "taxable" column.
Also, the Greater Memphis Chamber has been tracking new regulations on hemp-derived products. As of January 1, 2026, there is a more rigid wholesale tax structure for these items. If you're in the CBD or hemp space in Memphis, your tax reporting just got a lot more granular.
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Common Misconceptions About Memphis Taxes
Sorta surprisingly, many people think the city sales tax covers everything. It doesn't.
Prescription drugs are exempt. So are many medical devices. If you're a farmer, you can get an Agricultural Sales Tax Exemption, which covers things like seeds, fertilizer, and machinery. Non-profits also get a pass, provided they have their 501(c)(3) paperwork filed correctly with the state.
Another weird one? Services. Generally, services (like getting a haircut or hiring a lawyer) aren't taxed in Tennessee. However, if the service involves repairing or cleaning "tangible personal property"—like getting your car fixed or your house pressure-washed—it becomes taxable.
Actionable Steps for Memphis Residents and Pros
- Check your POS: If you’re a business owner, make sure your Point of Sale system is programmed for 9.75%. Don't just set it to 9% and hope for the best. That 0.75% gap will come out of your pocket during an audit.
- Save Receipts for Big Items: If you moved to Memphis from out of state and brought a car you bought less than six months ago, you might owe "titling tax" or use tax. Keep your original bill of sale to prove you already paid tax elsewhere so you can get a credit.
- Use the TN Sales Tax Map: The Department of Revenue has a "Situs" locator online. If you’re ever unsure if an address is inside the Memphis city limits or just in Shelby County, plug the address in there. It’ll give you the exact rate.
- Watch for Sales Tax Holidays: Tennessee usually does a back-to-school sales tax holiday in late July. It’s the one time you can dodge the 9.75% on clothing and school supplies. Mark your calendar for the last weekend in July; it's the only real "break" you get all year.
Understanding the Memphis city sales tax isn't exactly thrilling, but it's part of the price of living in a state with no income tax. Whether you're buying a rack of ribs or a new SUV, knowing these rates helps you budget better and keep the taxman at bay.
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Stay diligent with your records, especially if you’re running a side hustle or a full-scale business in the city. The Tennessee Department of Revenue is surprisingly efficient at catching discrepancies, and an audit is the last thing any Memphian wants to deal with during BBQ season.