Are digital products taxable in Tennessee in 2026?

Yes. Tennessee taxes "specified digital products" — digital audio works (music, audiobooks), digital audio-visual works (movies and video), and digital books (eBooks) — under Tenn. Code Ann. § 67-6-233 at the 7% state rate plus a local option tax of 1.50%–2.75%. Tennessee also taxes remotely accessed software (SaaS). Both permanent and less-than-permanent (subscription) use rights are taxable.

Does Tennessee charge sales tax on streaming services in 2026?

Yes. Unlike some states, Tennessee taxes streamed video the same way as streamed music: digital audio-visual works (movies, TV shows, video) and digital audio works (music) are both taxable specified digital products, including subscription access and digital codes. Satellite radio subscriptions are excluded from specified digital products.

Is SaaS taxable in Tennessee?

Yes. Remotely accessed software — software that stays in the seller's possession but is used from a Tennessee location — has been taxable for billing periods on or after July 1, 2015 under Important Notice #15-14 and Tenn. Code Ann. § 67-6-231. The 7% state rate plus local tax applies, and a charge covering users in multiple states can be allocated to Tennessee by the percentage of users located there.

Tennessee Digital Products Sales Tax Guide — 2026

Updated 2026-05-27

Guide content last reviewed: 2026-06-08

If your Digital Products business sells $100,000 into Tennessee in a calendar year, you have economic nexus and must register, collect, and remit Tennessee sales tax.

Are digital products taxable in Tennessee?

Yes — Tennessee is one of the broadest digital-tax states. It taxes specified digital products (music, movies and streamed video, and eBooks) AND remotely accessed software (SaaS) at the 7% state rate plus a local option tax. Unlike Kentucky, Tennessee taxes streamed video the same way it taxes streamed music.

Taxable digital categories

Digital audio works — downloaded or streamed music, audiobooks, ringtones, and other recorded sounds
Digital audio-visual works — movies, TV shows, and downloaded or streamed video
Digital books — eBooks
Video game digital products — games and in-game digital products that are downloaded or accessed
Subscriptions, access, and digital codes that deliver a specified digital product, whether the use rights are permanent or conditioned on continued payment
Remotely accessed software (SaaS) — software that stays in the seller’s possession but is used from a Tennessee location, taxable for billing periods on or after July 1, 2015

Not taxable / special treatment

Satellite radio subscriptions — excluded from "specified digital products"
Data processing and information services where the purchaser’s primary purpose is the processed data or information rather than software
Internet access, payment and transaction processing, payroll, and pure data storage — listed in Important Notice #15-14 as not remotely accessed software

Tennessee taxes specified digital products under Tenn. Code Ann. § 67-6-233 — electronically transferred digital audio works, digital audio-visual works, and digital books. Both permanent and less-than-permanent (subscription) use rights are taxable, and so are subscriptions to, access to, and digital codes for those products. Tennessee differs from Kentucky here: digital audio-visual works (streamed and downloaded video) are fully taxable specified digital products in Tennessee, not carved out of the definition.

SaaS / remotely accessed software: Tennessee taxes the use of software that remains in the seller’s possession but is accessed by a Tennessee customer (SaaS), for billing periods on or after July 1, 2015, under Tenn. Code Ann. § 67-6-231 and Important Notice #15-14. When a charge covers users in Tennessee and other states, the dealer or customer can allocate to Tennessee the percentage of the price equal to the percentage of users in the state. Important Notice #15-14 lists what is not remotely accessed software — data and information processing, payment and transaction processing, payroll, internet access, and pure data storage.

Rate and marketplaces: Tennessee’s state rate is 7%, and a local option tax of 1.50%–2.75% applies on top depending on the city and county, so combined rates commonly land around 9.25%–9.75%. A marketplace facilitator must collect and remit Tennessee tax on facilitated sales effective October 1, 2020 (with a $100,000 sales threshold). If all of your taxable Tennessee sales run through such marketplaces, you generally do not have to register; direct sales from your own store remain your responsibility once you have nexus.

Tennessee digital-tax rules last verified: 2026-06-08. Sources: Tennessee Department of Revenue — SUT-65: Specified Digital Products; Tenn. Code Ann. § 67-6-233 — Taxation of specified digital products; Tennessee Department of Revenue — Remotely Accessed Software (Important Notice #15-14); Tennessee Department of Revenue — Out-of-State Dealers and Marketplace Facilitators. date_retrieved: 2026-06-08. State rules change — confirm category-by-category with the Tennessee state tax agency before invoicing.

Sales tax on digital products in Tennessee

“Digital products” covers eBooks, audiobooks, video downloads, online courses, streaming subscriptions, digital artwork, stock photos, music, and similar non-physical delivered goods. Whether Tennessee taxes them depends on how the state classifies the product — “specified digital products”, “electronic transfer of canned software”, or a service. Rules vary more than for physical goods.

If taxable in Tennessee, the product is subject to 7.00% state rate plus any applicable local rate based on the buyer's address.

Which digital products does Tennessee tax?

Most states sort digital goods using the Streamlined Sales Tax definition of “specified digital products”, which splits them into three subcategories a state can tax or exempt independently:

Digital audio-visual works — downloaded or streamed movies, shows, and recorded events. Streaming video subscriptions fall here.
Digital audio works — downloaded or streamed music, podcasts, audiobooks, and ringtones. Streaming music subscriptions fall here.
Digital books — eBooks. Newspapers, periodicals, blogs, and databases are excluded from the “book” definition and follow their own rules.

Because a state may tax one subcategory and exempt another, “are digital products taxable” rarely has a single yes/no answer. Where Tennessee taxes a subcategory, the charge is subject to the 7.00% state rate plus any local rate at the buyer’s address. Software subscriptions (SaaS and electronically delivered “canned” software) sit outside this framework and follow Tennessee’s separate software-taxability rule — see the SaaS guide for that determination.

Framework source: Streamlined Sales Tax Governing Board — “Specified Digital Products” definition (SSUTA §332). date_retrieved: 2026-06-04. State-by-state taxability still varies; verify each subcategory with the Tennessee Department of Revenue before invoicing.

Key distinctions

Specified digital products. Many states (adopting Streamlined Sales Tax definitions) tax SDPs — digital audio/video/books.
Online courses and education. Most states treat live-instruction courses as non-taxable services but treat pre-recorded course access as taxable digital products. Watch for this split if you sell both.
Subscriptions. Bundled subscription boxes with mixed digital + physical content are often taxed as a single taxable bundle — you can't allocate across taxable and non-taxable components unless the invoice separately states them.
B2B vs B2C. Some states exempt B2B digital products when bought for resale or when the buyer has a direct-pay permit. Keep certificates on file.

Common digital-product mistakes in Tennessee

Treating all digital products the same across states — eBook tax treatment differs from SaaS, which differs from streaming.
Bundling digital + physical goods without a line-item breakdown. Most states tax the full bundle at the physical rate if not itemized.
Applying origin-based sourcing (your state's rate) when most states source digital products to the buyer's billing or shipping address.

Tennessee nexus note

Economic nexus in Tennessee triggers at $100,000 in gross sales delivered into Tennessee in the current or prior calendar year. No transaction count threshold.

What to do next

Read the full Tennessee overview for thresholds, filing frequency, marketplace facilitator rules, and registration links. Use the nexus calculator to check whether you have crossed the threshold. For background on the post-Wayfair economic nexus framework, see the pillar guide.

Frequently asked questions

Are digital products taxable in Tennessee in 2026?: Yes. Tennessee taxes "specified digital products" — digital audio works (music, audiobooks), digital audio-visual works (movies and video), and digital books (eBooks) — under Tenn. Code Ann. § 67-6-233 at the 7% state rate plus a local option tax of 1.50%–2.75%. Tennessee also taxes remotely accessed software (SaaS). Both permanent and less-than-permanent (subscription) use rights are taxable.
Does Tennessee charge sales tax on streaming services in 2026?: Yes. Unlike some states, Tennessee taxes streamed video the same way as streamed music: digital audio-visual works (movies, TV shows, video) and digital audio works (music) are both taxable specified digital products, including subscription access and digital codes. Satellite radio subscriptions are excluded from specified digital products.
Is SaaS taxable in Tennessee?: Yes. Remotely accessed software — software that stays in the seller's possession but is used from a Tennessee location — has been taxable for billing periods on or after July 1, 2015 under Important Notice #15-14 and Tenn. Code Ann. § 67-6-231. The 7% state rate plus local tax applies, and a charge covering users in multiple states can be allocated to Tennessee by the percentage of users located there.
What Tennessee sales tax rate applies to digital products?: Tennessee's state sales and use tax rate is 7%, and a local option tax of 1.50%–2.75% applies on top depending on the city and county, so combined rates on taxable digital products commonly land around 9.25%–9.75%.
Who collects Tennessee sales tax on digital products sold through a marketplace?: A marketplace facilitator must collect and remit Tennessee sales tax on facilitated sales effective October 1, 2020, under a $100,000 sales threshold. If all of your taxable Tennessee sales run through such marketplaces, you generally are not required to register; direct sales from your own store remain your responsibility once you have nexus.

Sources

date_retrieved: 2026-05-27