Tennessee Code Annotated
Tenn. Code Ann. § 67-4-708 (2026)
Classifications
✓ current as of May 2026
Businesses, vocations and occupations that are taxable are set forth in the following classifications; provided, that each person shall be classified according to the dominant business activity:
- (1)Classification 1. Each person engaged in the business of making sales of the following:
- (A) Food and/or beer as defined in § 57-6-102, generally destined for home preparation and consumption, except persons engaged in the business of selling delicatessens and candy at retail; and services performed by food brokers;
- (B) Lumber, building materials, tools, builders' hardware, paint and glass, electrical supplies, roofing materials, farm equipment, plumbing, heating and air conditioning equipment, and other basic lines of hardware; and sales of tangible personal property by persons operating service stations, except sales covered by subdivision (1)(D);
- (C) Hay, grain, feed, fertilizer, seeds, bulbs, nursery stock and other farm, lawn and garden supplies and tools;
- (D) Gasoline, diesel fuel and motor oils sold at retail; or
- (E) Gasoline and diesel fuel sold at wholesale;
- (2)Classification 2. Each person engaged in the business of making sales of the following:
- (A) New or used motor vehicles, parts and accessories, tires, batteries, motor boats and other watercraft, marine supplies, outboard motors, mobile homes and campers, motorcycles and go-carts;
- (B) Clothing, shoes, hats, underwear, and related articles for personal wear and adornment, except persons engaged in the business of selling at retail clothing to individual order;
- (C) Home furnishings, including persons engaged in the business of selling at retail, radios, television sets, record players, high-fidelity and sound reproducing equipment, musical instruments, phonograph records, pianos and sheet music. This classification includes household furniture, floor coverings and related products, draperies, curtains, upholstery, china, glassware and metalware for kitchen and table use, miscellaneous home furnishings, such as brooms, brushes, lamps and shades, electric and gas refrigerators, stoves and other household appliances;
- (D) Prescription drugs and patent medicines;
- (E) Coal, wood, ice, fuel oil and liquefied petroleum gas;
- (F) Tangible personal property not specifically enumerated or described elsewhere in this part;
- (G) Prepared food and drinks, including alcoholic beverages, for consumption on and/or off the premises;
- (H) Cut flowers and growing plants; or
- (I) Advertising specialties;
- (3)Classification 3.
- (A) Each person engaged in the business of making sales of the following:
- (i) Delicatessens and candy;
- (ii) Clothing made to individual order;
- (iii) Antique furniture, furnishings and objects of art;
- (iv) Books and magazines, stationery, accounting and legal forms, office forms and supplies, pens and pencils, school supplies and writing supplies;
- (v) Sporting goods and equipment, bicycles, and bicycle parts and accessories;
- (vi) Any combination of the lines of jewelry, such as diamonds and other precious stones mounted in precious materials, as rings, bracelets and brooches, sterling and plated silverware, watches and clocks;
- (vii) Cigars, cigarettes, tobacco and smokers supplies;
- (viii) Toys, games, and hobby kits and supplies;
- (ix) Cameras, films, and other photographic supplies and equipment;
- (x) Gift and novelty merchandise, souvenirs, and miscellaneous small art goods, such as greeting cards and holiday decorations; or
- (xi) Architectural supplies, artists' paints and supplies, artificial flowers, awnings, baby carriages, bait, banners, binoculars, coins, electric razors, fireworks, flags, gemstones, hearing aids, leather goods, luggage, optical supplies except for prescription eye-ware, including eyeglasses, contact lenses and other related tangible personal property, dispensed by an ophthalmologist or optometrist in conjunction with professional services rendered to patients, orthopedic and artificial limbs, pet foods, pets, piers and floats, rock and stone specimens, rubber stamps, stamps, swimming pools, telescopes, tents, theatre programs, trophies, trunks, typewriters, toupees, wiglets and wigs;
- (B) Each person making sales from the operation of pawn shops;
- (C) Each person making sales of services or engaging in the business of furnishing or rendering services, except those described in subdivisions (3)(C)(i)-(xvi). It is the legislative intent that the exceptions in subdivisions (3)(C)(i)-(xvi) shall include the sales of services by those businesses or establishments so described in the Standard Industrial Classification Index of 1972, including all supplements and amendments prepared by the bureau of the budget of the federal government, except where otherwise provided:
- (i) Medical, dental, and allied health services to human beings, including sanitorium, convalescent and rest home care, but excluding services by persons engaged in the business of making dentures and artificial teeth;
- (ii) Legal services;
- (iii) Educational services offered by elementary and secondary schools, colleges, universities, professional schools and junior colleges, library and information centers, correspondence schools, vocational schools and specialized nondegree granting schools;
- (iv) Services rendered by nonprofit membership organizations operating on a nonprofit membership basis for the promotion of the interest of the members;
- (v) Domestic service performed in private households;
- (vi) Services furnished by nonprofit educational and research agencies;
- (vii) Services by religious and charitable organizations;
- (viii) Accounting, auditing and bookkeeping services;
- (ix) Public utilities as defined in § 65-4-101;
- (x) Services furnished by institutions that are engaged in deposit banking or closely related functions, including fiduciary activities, services furnished by persons engaged in extending credit or lending money except persons taxable under subdivision (5); services furnished by establishments engaged in the underwriting, purchase, sale or brokerage of securities on their own account or on the account of others; services furnished by exchanges, exchange clearing houses and other services allied with the exchange of securities and commodities; services furnished by investment trusts, investment companies, holding companies, and commodity trading companies;
- (xi) Insurance carriers or insurance agents of any type selling or furnishing necessary services related to insurance and insurance adjustors;
- (xii) Operators of residential and nonresidential buildings except hotels, motels and rooming houses;
- (xiii) Lessors of the following properties: agricultural, airport, forest, mining, oil, and public utility;
- (xiv) Services furnished by persons engaged in the practice of veterinary medicine, dentistry or surgery, including services involving the boarding and lodging of animals;
- (xv) Services furnished by persons engaged in the practice of architecture, engineering or land surveying; or
- (xvi) Farmers providing services to other farmers for the planting or harvesting of agricultural products or for the preparation, improvement, or maintenance of land used in the production of agricultural products;
- (A) Each person engaged in the business of making sales of the following:
- (4)Classification 4. Each person engaged or continuing in this state in the business of contracting or performing a contract or engaging in any of the activities, or similar activities, listed in subdivisions (4)(A) and (B) for a price, commission, fee or wage:
- (A) This classification includes persons receiving compensation from rendering exterminating services, from installing personal property, from constructing, building, erecting, repairing, grading, excavating, drilling, exploring, testing, or adding to any building, highway, street, sidewalk, bridge, culvert, sewer, irrigation or water system, drainage, or dredging system, levee or levee system or any part thereof, railway, reservoir, dam, power plant, electrical system, air conditioning system, heating system, transmission line, pipeline, tower, dock, storage tank, wharf, excavation, grading, water well, any other improvement or structure or any part thereof;
- (B) Each person engaged in the business of selling livestock, poultry or other farm products not exempted under § 67-4-712; provided, that the tax imposed in § 67-4-709(4) shall apply to all commissions, fees, margins or other charges received from such sales; and
- (5)Classification 5.
- (A) Industrial loan and thrift companies required to obtain a certificate and a license under title 45, chapter 5.
- (B) Each person engaged in the business of making sales as a natural gas marketer.
Amended by 2014 Tenn. Acts, ch. 942,s 2, eff. 7/1/2014.
Amended by 2013 Tenn. Acts, ch. 313, s 7, eff. 1/1/2014.
Acts 1971, ch. 387, § 5; modified; 1972, ch. 850, § 5; 1977, ch. 313, § 1; 1977, ch. 321, § 1; 1979, ch. 28, § 6; 1981, ch. 321, § 1; 1983, ch. 394, §§ 1, 2; T.C.A., § 67-5805; Acts 1987, ch. 410, § 1; 2006, ch. 583, §§ 1, 2; 2006, ch. 583, §§ 1, 2; 2009 , ch. 530, § 74; 2010 , ch. 1134, § 43.
Notes of Decisions
Cited in 8
cases (1 in the last 5 years), 1991–2026 · leading case: NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015).
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
Nat'l Gas Distributors, Inc. v. State, 804 S.W.2d 66 (Tenn. 1991). “If any further assurance be needed to confirm this certainty, one needs only to look to T.C.A. § 67-4-708 which establishes classifications for the taxation of businesses, vocations and occupations according to their dominant business activity.”
City of Bartlett v. Sanders, 832 S.W.2d 546 (Tenn. Ct. App. 1991). “[T]he making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-4-708(1X3) is declared to be a privilege upon which each county and/or incorporated municipality in which such business, business activity,…”
Heath v. Creson, 949 S.W.2d 690 (Tenn. Ct. App. 1997). “, § 67-5805 [now § 67-4-708(1)-(3) ], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
SAP Am., Inc. v. David Gerregano, Comm'r of Revenue, State of Tennessee (Tenn. Ct. App. 2026). “” The Department classified all of these activities as sales of services under Classification 3 of Tenn. Code Ann. § 67-4-708 . For business tax purposes, the Department consults the Standard Industrial Classification (“SIC”) Index to determine classifications for a business’s…”
Auto Glass Co. of Memphis, Inc. d/b/a Jack Morris Auto Glass v. David Gerregano Comm'r, Dep't of Revenue, State of Tennessee (Tenn. Ct. App. 2019). “See Tenn. Code Ann. § 67-4-708 (listing the various tax classifications).”
Eddie Heath v. Jayne S. Creson, Waylon Wininger, & Pat Hutchinson, & A.C. Gilless (Tenn. Ct. App. 2001). “, § 67-5805 [now § 67-4-708(1)-(3)], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
Pfizer, Inc. v. Ruth E. Johnson, Comm'r of Revenue for the State of Tennessee (Tenn. Ct. App. 2006). “Accordingly, in addition to the minimum business tax, those in Classification 2 must pay “[o]ne tenth (1/10) of one percent -3- (1%) of all the retail sales of the business; and [o]ne fortieth (1/40) of one percent (1%) of all the wholesale sales of the business.”
— Tenn. Code Ann. § 67-4-708(1) — 2 cases
Heath v. Creson, 949 S.W.2d 690 (Tenn. Ct. App. 1997). “, § 67-5805 [now § 67-4-708(1)-(3) ], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
Eddie Heath v. Jayne S. Creson, Waylon Wininger, & Pat Hutchinson, & A.C. Gilless (Tenn. Ct. App. 2001). “, § 67-5805 [now § 67-4-708(1)-(3)], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
— Tenn. Code Ann. § 67-4-708(1X3) — 1 case
City of Bartlett v. Sanders, 832 S.W.2d 546 (Tenn. Ct. App. 1991). “[T]he making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-4-708(1X3) is declared to be a privilege upon which each county and/or incorporated municipality in which such business, business activity,…”
— Tenn. Code Ann. § 67-4-708(2)(A) — 1 case
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
— Tenn. Code Ann. § 67-4-708(2)(F) — 1 case
City of Bartlett v. Sanders, 832 S.W.2d 546 (Tenn. Ct. App. 1991). “[T]he making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-4-708(1X3) is declared to be a privilege upon which each county and/or incorporated municipality in which such business, business activity,…”
— Tenn. Code Ann. § 67-4-708(3) — 2 cases
Heath v. Creson, 949 S.W.2d 690 (Tenn. Ct. App. 1997). “, § 67-5805 [now § 67-4-708(1)-(3) ], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
Eddie Heath v. Jayne S. Creson, Waylon Wininger, & Pat Hutchinson, & A.C. Gilless (Tenn. Ct. App. 2001). “, § 67-5805 [now § 67-4-708(1)-(3)], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
— Tenn. Code Ann. § 67-4-708(3)(A)(xi) — 1 case
City of Bartlett v. Sanders, 832 S.W.2d 546 (Tenn. Ct. App. 1991). “[T]he making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-4-708(1X3) is declared to be a privilege upon which each county and/or incorporated municipality in which such business, business activity,…”
— Tenn. Code Ann. § 67-4-708(3)(C) — 3 cases
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
Heath v. Creson, 949 S.W.2d 690 (Tenn. Ct. App. 1997). “, § 67-5805 [now § 67-4-708(1)-(3) ], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
Eddie Heath v. Jayne S. Creson, Waylon Wininger, & Pat Hutchinson, & A.C. Gilless (Tenn. Ct. App. 2001). “, § 67-5805 [now § 67-4-708(1)-(3)], are not state taxes, but are instead local privilege taxes which each county and/or municipality is permitted to levy.”
— Tenn. Code Ann. § 67-4-708(3)(C)(ix) — 1 case
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
— Tenn. Code Ann. § 67-4-708(3)(C)(xiii) — 1 case
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
— Tenn. Code Ann. § 67-4-708(l) — 1 case
NAJO Equip. Leasing, LLC v. Comm'r of Revenue, 477 S.W.3d 763 (Tenn. Ct. App. 2015). “Here, the Department assessed NAJO for taxes on its gross receipts pursuant to Tennessee Code Annotated Section 67-4-704(a) and Section 67-4-708(2)(A) and (F).”
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