Short answer
Tennessee taxes vehicle sales at 7% state plus up to 2.75% local (depends on location). Tennessee taxes the price after the trade-in is deducted. The trade-in must be of like kind and character and be identified as a trade-in by model and serial number on the customer's invoice, and the credit cannot exceed the sales price of the vehicle being purchased. A Tennessee resident who buys a vehicle in another state and imports it gets no trade-in credit against Tennessee use tax unless the traded-in vehicle was previously registered in Tennessee in that person's name. Tennessee exempts out-of-state buyers only under specific conditions: The buyer has up to three days to remove the vehicle from Tennessee to another state. A Seller/Purchaser Affidavit of Exemption (the 3-Day Affidavit) must be completed naming the city and state the vehicle will be delivered to. A vehicle registered in another state but permanently located in Tennessee does not qualify, and Tennessee residents who sign the affidavit but keep the vehicle in Tennessee can be held liable for tax, penalty, and interest. Tennessee credits sales tax legally paid to another state, so the same dollars are not taxed twice. The rules above cover retail dealer sales; most states handle leases and private-party sales separately.
Tennessee car sales tax quick facts
Last verified August 23, 2026| Sales tax rate on vehicles | 7% state plus up to 2.75% local (depends on location)[1] |
| Trade-in credit | Tennessee taxes the price after the trade-in is deducted. The trade-in must be of like kind and character and be identified as a trade-in by model and serial number on the customer's invoice, and the credit cannot exceed the sales price of the vehicle being purchased. A Tennessee resident who buys a vehicle in another state and imports it gets no trade-in credit against Tennessee use tax unless the traded-in vehicle was previously registered in Tennessee in that person's name.[2] |
| Selling to an out-of-state buyer | Tennessee exempts out-of-state buyers only under specific conditions: The buyer has up to three days to remove the vehicle from Tennessee to another state. A Seller/Purchaser Affidavit of Exemption (the 3-Day Affidavit) must be completed naming the city and state the vehicle will be delivered to. A vehicle registered in another state but permanently located in Tennessee does not qualify, and Tennessee residents who sign the affidavit but keep the vehicle in Tennessee can be held liable for tax, penalty, and interest.[2] |
| Credit for tax paid to another state | Tennessee credits sales tax legally paid to another state, so the same dollars are not taxed twice.[3] |
| Dealer doc fee | Cap: Not yet verified against an official source. Confirm with the Tennessee Department of Revenue. Official site → · taxable[4] |
| Temp tag for the drive home | Tennessee licensed dealers issue temporary dealer drive-out tags (green tags) through the state's EZ-Tag print-on-demand system. Tennessee extended the temporary dealer drive-out tag from 30 days to 60 days. (valid 60 days)[5] |
| Out-of-state buyer registration | Not yet verified against an official source. Confirm with the Tennessee Department of Revenue. Official site → |
From the desk
Tennessee stacks a local single-article tax with its own cap structure on top of the state rate, which makes the first few thousand dollars price differently than the rest. The desk that memorizes the cap points quotes faster than the DMS.
Selling to an out-of-state buyer in Tennessee
Tennessee exempts out-of-state buyers only under specific conditions: The buyer has up to three days to remove the vehicle from Tennessee to another state. A Seller/Purchaser Affidavit of Exemption (the 3-Day Affidavit) must be completed naming the city and state the vehicle will be delivered to. A vehicle registered in another state but permanently located in Tennessee does not qualify, and Tennessee residents who sign the affidavit but keep the vehicle in Tennessee can be held liable for tax, penalty, and interest.[2]
On paper that means Seller/Purchaser Affidavit of Exemption for Motor Vehicles, Trailers, and Boats Sold for Removal from Tennessee Within Three Days (3-Day Affidavit), filled out at delivery. If the form never gets signed, the dealer eats the tax, not the buyer.
Then comes the part nobody staples to the deal jacket: moving the title, issuing the temp tag, and getting the registration done in the buyer's state. That handoff chain is what Voltra's title tracking was built to watch.
Buying in Tennessee from out of state
If you live in another state and buy in Tennessee, the deciding rule is where the vehicle gets registered: your home state's tax applies at registration, and what happens at the Tennessee sale depends on the row above. Tennessee credits sales tax legally paid to another state, so the same dollars are not taxed twice.[3]
Registration and temp tags
Tennessee licensed dealers issue temporary dealer drive-out tags (green tags) through the state's EZ-Tag print-on-demand system. Tennessee extended the temporary dealer drive-out tag from 30 days to 60 days. Validity: 60 days.[5]
Bordering states
Cross-border deals from Tennessee most often involve Alabama, Arkansas, Georgia, Kentucky, Missouri, Mississippi, North Carolina and Virginia. Treat each pairing as its own problem and put it through the out-of-state checker.
Sources
- revenue.support.tn.gov/hc/en-us/articles/360060395571-VTR-34-Sales-Tax-on-a-Vehicle-Purchase · verified 2026-08-23
- www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/june-2025/auto-dealership-manual.pdf · verified 2026-08-23
- revenue.support.tn.gov/hc/en-us/articles/360059953452-VTR-37-Sales-Tax-on-a-Vehicle-Purchased-out-of-State · verified 2026-08-23
- revenue.support.tn.gov/hc/en-us/articles/360059968612-VTR-72-Tax-on-Document-Fees · verified 2026-08-23
- www.tn.gov/revenue/title-and-registration/ez-dealer-tags.html · verified 2026-08-23