Tennessee LLC Taxes

State entity taxes

Franchise / privilege tax: Franchise & Excise Tax: $100 minimum franchise + 6.5% excise on net earnings.

State income tax on members: Tennessee has no state personal income tax, so members pay no state tax on their share of LLC pass-through income.

Federal taxation

By default, single-member LLCs are disregarded entities and report on Schedule C of the owner’s personal return. Multi-member LLCs file Form 1065 (partnership). Either may elect S-Corp or C-Corp tax treatment via Form 2553 or Form 8832.

Sales tax

If your Tennessee LLC sells tangible goods or certain taxable services, you generally need a state sales tax permit. Check the Tennessee Department of Revenue / Taxation for the applicable rate and registration process.

Tennessee-specific note

Tennessee LLC formation fee is $50 per member with a $300 minimum / $3,000 maximum. The Franchise & Excise Tax applies to most LLCs (with a SMLLC/disregarded exception in some cases).

Self-employment tax (federal)

Members of pass-through LLCs generally pay self-employment tax (15.3% on the first ~$168,600 of net earnings, plus 2.9%+ Medicare beyond that) on their distributive share. Electing S-Corp status can sometimes reduce SE tax but adds payroll-administration complexity.