Tennessee Has No Income Tax on Wages — But the Franchise & Excise Tax on Your Business Is a Different Story
No wage income tax is a real edge — but the F&E tax on the company and the nation's highest sales tax still need managing. We keep proactive, remote guidance in your corner.
0%
Tax on Wage Income
6.5%
Excise Tax (F&E)
~9.55%
Highest Sales Tax in the U.S.
~80%
of Our Clients Fully Remote
The whole financial picture
From clean books to CFO strategy — one connected team
Whether your Tennessee business needs day-to-day bookkeeping, proactive tax planning, reliable monthly reporting, or fractional CFOstrategy, we handle it as one connected system — not a bookkeeper, a tax preparer, and an advisor who never talk to each other. We meet you where you are and grow with you.
Bookkeeping
Clean, current books
Tax
Proactive planning & filing
Controller
Reliable reporting
CFO
Strategy & forecasting
And all of it delivered remotely. A Tennessee business gets the full range of our services — and the same depth as a local firm — without anyone ever needing to come into an office. About 80% of our clients run the whole relationship this way.
Quick answer
Does Tennessee really have no income tax for business owners?
On wages and salary, yes — Tennessee has no personal income tax (the old Hall tax on interest and dividends was fully repealed in 2021). But the business itself pays the Franchise & Excise tax: a 6.5% excise tax on net earnings plus a franchise tax on net worth. And Tennessee has the highest combined sales tax in the country(~9.55%). With no owner-level income tax, there's no PTET to elect — so the real tax planning here is federal-first (entity choice, the S-corp election, retirement).
How We Help Tennessee Businesses Thrive
Bookkeeping
Accurate and timely bookkeeping services tailored to Tennessee's unique tax environment, ensuring compliance with franchise and excise taxes.
Learn MorePayroll
Streamlined payroll processing for Tennessee businesses, handling all state-specific withholdings and compliance, even without state income tax.
Learn MoreController
Fractional Controller services providing strategic financial oversight and robust internal controls for growing Tennessee companies.
Learn MoreCFO
Expert fractional CFO guidance for Tennessee businesses, focusing on growth strategies, tax optimization, and financial forecasting.
Learn MoreHow We’d Work With You
Our Approach to a Tennessee Business
No two businesses are the same, but the path from “not sure” to in-control is consistent. Here’s what working with us looks like.
Understand Your Position
We get your books clean and reconciled so you can see where the business actually stands, month to month, without guesswork.
Find the Tennessee Opportunities
We manage the Franchise & Excise tax on the company, get the sales-tax exposure right in a high-rate state, and focus your real savings where they live in Tennessee: federal moves like the S-corp election.
Build the System
We put bookkeeping, payroll, and reporting on a repeatable system designed from a whole-company view — so the numbers stay clean and current instead of becoming a year-end scramble.
What You Can Expect
Clarity on what you owe and why, proactive planning instead of surprises, and financials a lender or investor can trust. That’s the outcome we build toward.
Tennessee's Tax Landscape at a Glance
Nothing on your wages — but the company and the cash register are a different story.
$0
Personal income tax on wages
6.5% + FR
Excise tax on earnings + franchise tax on net worth
~9.55%
Combined sales tax — highest in the U.S.
What This Can Look Like in Real Dollars
IllustrativeBecause Tennessee has no wage income tax, your biggest lever is federal. Say you run a Nashville services business netting about $140,000a year and take all of it as owner’s pay — every dollar gets hit with the roughly 15.3% self-employment tax. Elect S-corp status, pay yourself a reasonable salary of, say, $85,000, and the remaining ~$55,000 comes out as a distribution that isn’t subject to that tax.
$140K
Net profit
$85K
Reasonable salary
~$8,000
Potential SE-tax saved / yr
That’s roughly $8,000back in your pocket — and in Tennessee it’s a clean, purely federal win with no state income tax muddying the math. The catch: the salary has to be genuinely reasonable, and the election only pays off above a certain profit level. Worth checking with real numbers.
Run your own numbers on the S-Corp CalculatorServing Key Tennessee Regions
Nashville Metro
Industries: Healthcare, Music, Technology, Hospitality
Compliance Note: Complex sales tax for entertainment and digital services.
Memphis Metro
Industries: Logistics/Distribution, Healthcare, Manufacturing
Compliance Note: Multi-state tax implications for logistics companies.
Knoxville/East TN
Industries: Manufacturing, Energy, Tourism, Technology
Compliance Note: Special considerations for manufacturing incentives and property taxes.
Chattanooga/Southeast TN
Industries: Manufacturing, Automotive, Outdoor Recreation, Logistics
Compliance Note: Cross-border tax issues with Georgia businesses.
Tri-Cities/Northeast TN
Industries: Healthcare, Manufacturing, Education
Compliance Note: Navigating tax implications for non-profit healthcare entities.
Jackson/West TN
Industries: Agriculture, Manufacturing, Retail
Compliance Note: Specific tax rules for agricultural businesses and land use.
Frequently Asked Questions About Tennessee Business Taxes
Who You’re Actually Working With
Two founders who’ve sat on both sides of your financials
You aren’t handed off to a junior bookkeeper. You work directly with the people whose names are on the door — and their backgrounds are exactly the ones a growing business needs in its corner.
Carrie Anderson
Co-Founder · The Lender’s Eye
A former commercial banker and underwriter who personally reviewed 300+ business loans. She knows exactly how a bank reads your financials to decide what you can borrow — because she used to be the one reading them. That’s why our clients’ books come out lender-ready, not just tax-ready.
Jason Anderson
Co-Founder · The Operator’s Eye
A big-firm-trained accountant with a lifelong passion for processes, efficiency, and Six Sigma— made practical, not academic. He builds the job costing, tax strategy, and systems that let a company actually see where its money goes and scale without the wheels coming off.
Both spent years in the oil & gas industry, and both design financial systems from a whole-company view— not just an accounting lens. You get a firm that reads your numbers like a lender and builds systems like an operator.
Meet the teamRemote, and better for it
You’re in Tennessee. We’re in Montana.Here’s why that’s an advantage.
The best accountant for your business almost certainly isn’t the one with the nearest office. Modern accounting runs on cloud books, a secure portal, screen-share, and video — so the relationship is built on expertise and responsiveness, not drive time. A great remote firm beats an okay local one every single time.
About 80%of even our own local Montana clients run the entire relationship remotely — and never come into the office. Working with Tennessee businesses is exactly the same.
Cloud books, always on
Your numbers live in the cloud — you can see them any time, not just at tax season.
Real conversations
Scheduled video reviews and screen-shares where we walk through the numbers together.
Secure document portal
Send and sign everything safely — no dropping off a shoebox of receipts.
Same-day responsiveness
You get faster answers from us by email and call than from most firms down the street.
Start With a Number, Not a Sales Call
Not ready to talk to anyone yet? Fair. See where your Tennessee business stands first — each takes just a few minutes and costs nothing.
Financial Maturity Assessment
See exactly where your finances stand — from chaos to strategy — in about 8 minutes.
Try it freeS-Corp Tax Calculator
Find out whether an S-corp election could cut your self-employment tax this year.
Try it freeMulti-State Nexus Finder
In a high sales-tax state, see where you may owe sales or income tax across state lines.
Try it freeReady to get your Tennessee books working for you?
Let 406 Consulting Group help you navigate Tennessee's unique tax landscape and achieve financial clarity.
Schedule a Call