Tennessee is one of only a handful of states that taxes groceries, applying a 4% state sales tax on most food ingredients, with counties adding up to 2.75% in local tax, for a combined rate typically between 6.25% and 6.75%. The grocery tax is unusual nationally; only 13 states still tax groceries, and Tennessee’s grocery tax rate is among the highest in the country.
Food is a major monthly expense for families, especially in areas experiencing rising living costs. Research shows Tennessee’s tax structure relies heavily on sales taxes, which can create a higher tax burden for families with lower incomes—those who spend a greater share of their income on essentials like food.
For Tennessee households, particularly those navigating inflation in food prices, the grocery tax directly affects their ability to manage budgets and maintain food security. Some estimates suggest eliminating the state grocery tax could save an average Tennessee family several hundred dollars per year.