Doing business in Nashville: city taxes on top of state filings

The stack

• Franchise tax is $0.25 per $100 of net worth (property measure repealed from 2024); $100 minimum even when inactive.
• Excise tax is 6.5% of net earnings: LLCs pay it too, unlike most states.
• Nashville/Davidson County requires a business license; $3,000–$100,000 of receipts needs only a $15 minimal activity license.

Franchise and excise tax

Tennessee’s main business tax reaches most LLCs, LPs, and corporations, not just corporations. The excise tax is 6.5% of Tennessee-apportioned net earnings; the franchise tax is $0.25 per $100 of apportioned net worth, with a $100 minimum owed every year. Legislation in 2024 removed the alternative property measure from the franchise tax base and authorized refunds of tax paid under it.

Business tax

Separately, Tennessee’s state and local business tax is a gross receipts tax with rates by classification. Businesses with $100,000 or more of receipts in a jurisdiction register, obtain a standard business license, and file an annual business tax return with the Department of Revenue (minimum $22 for most classifications). Those with $3,000–$100,000 get a $15 minimal activity license from the Davidson County Clerk instead and don’t file a return.

Worked example

A Nashville LLC with $800,000 of receipts, $120,000 of net earnings, and $200,000 of net worth pays $7,800 excise (6.5%) and $500 franchise tax, plus business tax on receipts at its classification rate, and its owners pay no Tennessee tax on the wages or distributions they take out.

The state layer underneath

City taxes sit on top of state obligations, never instead of them. For the TN side, see remote workers and nexus, and check whether a hire or customer in Nashville creates a filing duty in the nexus checker.