Rates last verified: September 4th, 2026
Sources: Tennessee Department of Revenue; Tennessee General Assembly; Tennessee Emergency Communications Board. Full citations at the bottom of this page.
Tennessee treats telecom as a taxable service under its sales tax, and providers file a dedicated return: the TV programming and telecommunications sales and use tax return, not the standard sales tax form. The rates depend on two questions. Does the transmission stay inside Tennessee, and is the buyer a business? Intrastate service takes the 7% state rate plus a flat 2.5% local rate, no matter what the county or city charges on other sales. Interstate service sold to businesses takes a 7.5% state rate with no local tax, and interstate service sold to everyone else takes 7% plus a flat 1.5% local rate.
Quick Facts
| Item | Tennessee Treatment |
|---|---|
| Intrastate telecom | 7% state rate plus a flat 2.5% local rate, regardless of the local jurisdiction's own rate (Department of Revenue Notice 05-20; Sales and Use Tax Manual) |
| Interstate and international telecom sold to businesses | 7.5% state rate, exempt from local tax (Sales and Use Tax Manual; SLS 458 return instructions) |
| Interstate and international telecom sold to non-business customers | 7% state rate plus a flat 1.5% local rate (Sales and Use Tax Manual; SLS 458 return instructions) |
| 911 surcharge | $1.50 per month for each separately priced communications service with a monthly charge of $5 or more; a board-approved increase to $1.86 was vetoed by the governor on May 1, 2026 and has not taken effect (Sales and Use Tax Manual; Department of Revenue 911 surcharge page; Senate Joint Resolution 48) |
| Prepaid wireless 911 | $1.50 per retail transaction of $10 or more, collected by the retailer, which keeps a 2% administrative fee (Sales and Use Tax Manual; Notice 15-02; SLS 458 return instructions) |
| Voice over Internet Protocol (VoIP) | A taxable telecommunications service at the same rates as other telecom (Sales and Use Tax Manual) |
| Ancillary services (voicemail, directory assistance, conference bridging, billing) | Taxed separately from telecom at 7% state plus the flat 2.5% local rate (Sales and Use Tax Manual; SLS 458 return instructions) |
| Internet access | Not a telecommunications service and not subject to Tennessee sales tax; also protected by the federal Internet Tax Freedom Act (Sales and Use Tax Manual) |
| Sales for resale | Exempt with a valid resale certificate; a reseller may also buy communications services free of the 911 surcharge if it collects the surcharge from its own customers (Sales and Use Tax Manual; SLS 458 return instructions) |
How Tennessee Taxes Telecom Services
Tennessee law imposes sales tax on furnishing intrastate, interstate, and international telecommunications services for consideration, and the state adopted the Streamlined Sales and Use Tax Agreement definitions of telecommunications and ancillary services in 2004 and 2005. The definition is broad: electronic transmission of voice, data, audio, video, or other signals, regardless of the technology used and regardless of whether the Federal Communications Commission (FCC) or the Tennessee Public Utility Commission regulates the service. The Department of Revenue's manual names VoIP, cellular, local and long-distance, paging, fax, toll-free and 900 services, prepaid calling, and private communications services as taxable examples.
The rate structure replaces Tennessee's usual local option tax with flat local rates. Intrastate service pays the 7% state rate plus a flat 2.5% local rate, whatever the customer's county or city charges on ordinary sales. Interstate and international service splits by buyer: sales to businesses pay a 7.5% state rate and no local tax, and sales to non-business customers pay 7% plus a flat 1.5% local rate. Providers report all of it on the TV programming and telecommunications sales and use tax return, a separate form with its own schedules for the flat local rates and the 911 surcharge.
The base has firm edges. Internet access is not a telecommunications service and is not subject to Tennessee sales tax, a result the federal Internet Tax Freedom Act also compels. Information services and data processing services are not taxed. Ancillary services such as voicemail, directory assistance, vertical services, conference bridging, and separately stated billing services are not telecom either, but Tennessee taxes them separately at 7% state plus the flat 2.5% local rate. Enhanced services that combine transmission with computer processing, including VoIP, stay taxable at the same rates as other telecom even though the FCC does not regulate them as telecom.
Two exemptions matter to providers. Sales to other dealers for resale are exempt when supported by a valid resale certificate, though hotels, motels, colleges, universities, and hospitals may not buy telecom for resale and must instead collect tax from guests, students, and patients at the non-business rates. And interstate and international telecom sold to a qualified call center is exempt with the proper certificate.
911 And Other Per-Line Fees
Tennessee funds 911 through a single statewide surcharge under Tennessee Code Annotated, Title 7, Chapter 86. The rate is $1.50 per month for each separately priced communications service with a monthly charge of $5 or more, in effect since January 1, 2021. The Tennessee Emergency Communications Board voted on January 22, 2025 to raise the surcharge to $1.86, but under Tennessee Code Annotated, Section 7-86-128, a rate change takes effect only after the General Assembly ratifies it by joint resolution. Senate Joint Resolution 48 would have done that, with a September 1, 2026 start date, and the governor vetoed it on May 1, 2026. The rate stays at $1.50 unless the legislature acts again.
Prepaid wireless pays the same amount at retail. The seller collects $1.50 on each prepaid wireless transaction of $10 or more, on each separately priced item, and must state the surcharge separately on the receipt. Retailers that collect and remit the surcharge keep a 2% administrative fee. The surcharge does not apply to prepaid long-distance calling cards.
Four billing rules are easy to miss. The surcharge applies even to buyers exempt from sales tax, such as nonprofits and government agencies. A single subscriber cannot be charged more than 200 surcharges per month for one building with a single fixed address. The surcharge is not part of the sales price under Tennessee Code Annotated, Section 7-86-117, so no sales tax is due on it. And the surcharge also funds Tennessee's relay services and telecommunications devices access program through mandatory disbursements, so there is no separate relay line item to bill.
Taxability By Service Type
- Intrastate telecommunications services: taxable at 7% state plus a flat 2.5% local rate.
- Interstate and international telecom sold to businesses: taxable at 7.5% state, exempt from local tax.
- Interstate and international telecom sold to non-business customers: taxable at 7% state plus a flat 1.5% local rate.
- VoIP and other enhanced services: taxable at the same rates as other telecommunications services.
- Ancillary services (voicemail, directory assistance, vertical services, conference bridging, billing): taxable at 7% state plus the flat 2.5% local rate.
- Prepaid calling and prepaid wireless: taxable telecom; prepaid wireless also carries the 911 surcharge at retail on transactions of $10 or more.
- Internet access: not taxable; excluded by Tennessee law and the federal Internet Tax Freedom Act.
- Information services and data processing: not taxable.
- Sales for resale: exempt with a valid resale certificate, except purchases by hotels, motels, colleges, universities, and hospitals.
How CereTax Handles Tennessee
Tennessee's difficulty is not a rate lookup. The flat local rates make the math simple and the classification hard: every charge has to be sorted as intrastate or interstate, business or non-business, telecom or ancillary, taxable or excluded, and the 911 surcharge has its own thresholds and its own caps. CereTax assigns each charge to the right jurisdiction at the rooftop level, applies Tennessee's base rules by service type, and keeps an audit trail behind every calculation. If you serve customers in Tennessee, book a demo and bring a real invoice.
For the full evaluation checklist, see what a telecom tax engine should do.
Sources
- Tennessee Department of Revenue, Sales and Use Tax Manual, June 2025, Chapter 17 (telecommunications, ancillary services, and television programming services) and the 911 surcharge section. Accessed August 28, 2026.
- Tennessee Department of Revenue, Important Notice 05-20, Telecommunications. Accessed August 28, 2026.
- Tennessee Department of Revenue, Important Notice 15-02, Prepaid Wireless Calling Services 911 Surcharge. Accessed August 28, 2026.
- Tennessee Department of Revenue, 911 surcharge page (television and telecommunications tax). Accessed August 28, 2026.
- Tennessee Department of Revenue, instructions for the Tennessee sales and use tax return for TV programming and telecommunications services (SLS 458). Accessed August 28, 2026.
- Tennessee General Assembly, Senate Joint Resolution 48 (114th General Assembly) and SJR 48 fiscal memorandum, the resolution that would have ratified the 911 surcharge increase to $1.86 effective September 1, 2026, under Tennessee Code Annotated, Section 7-86-128; vetoed by the governor on May 1, 2026, with no override recorded. Accessed August 28, 2026; veto status checked September 3, 2026.
- Tennessee Emergency Communications Board, industry resources page, citing Tennessee Code Annotated, Title 7, Chapter 86. Accessed August 28, 2026.
- Tennessee Comptroller of the Treasury, 2015 emergency communications law text (definition of communications service, including voice over IP). Accessed August 28, 2026.
- Internet Tax Freedom Act, 47 U.S.C. § 151 note.
See how other states compare on the telecom tax by state hub.
Note: Always confirm current rates and filing obligations directly with the state’s DOR, PUC, or 911 authority before applying charges or remitting payments.
