Consumer Use Tax

Overview

Use Tax is the counterpart to the sales tax. All Tennessee residents, as well as businesses operating in the state, must pay use tax when goods are purchased from outside the state of Tennessee and brought or shipped into the state and the seller did not collect sales tax on the purchase. Purchases made from outside the state include, but are not limited to, mail-order catalog purchases, purchases made online, over-the-phone purchases, and purchases made from a store located in another state.  

Effective July 1, 2024, use tax also applies to the following services:

• Repairing tangible personal property or computer software;
• Laundering or dry cleaning of tangible personal property;
• Installation of tangible personal property that remains personal property after installation; and 
• Installation of computer software

when the repair, cleaning, or installation occurs at a place of business outside of Tennessee and the serviced tangible personal property or computer software is delivered by the seller to the purchaser or the purchaser’s designee within Tennessee for use or consumption within this state. 

The purpose of the use tax is not only to raise revenue, but also to protect local merchants, who must collect the sales tax, from unfair competition from out-of-state sellers who do not collect Tennessee's sales tax. The 45 states that impose a sales tax also levy a use tax.