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Determining Business Tax Classification

Tennessee's businesses that are subject to taxation under business tax laws must be classified to determine the correct amount of business tax to pay each year. These rates vary based on the type of business and, in many cases, whether the business sells at wholesale or retail.

Tennessee businesses pay business tax based on their "dominant business activity." Tennessee Code Annotated Section 67-4-702(a)(5) defines dominant business activity as the activity "the business activity that is the major and principal source of taxable gross sales." This means that a business pays all its business tax based on the source of the earnings that make up the majority of their collections.

The following lists show these different business tax classifications. Each business must choose a classification and only one classification is allowed. Businesses that need assistance in determining their classification may contact their county clerk, city business tax office, or the Tennessee Department of Revenue.