Tax and Compliance
Tennessee LLC Franchise Tax: Rates and Filing Guide
Tennessee LLC franchise tax generally uses Tennessee net worth, while the separate excise tax uses Tennessee taxable income. The published rates are 0.25% for franchise tax and 6.5% for excise tax. A taxable entity generally faces a $100 minimum franchise tax, subject to applicable exemptions and special rules.
Tennessee LLC franchise tax generally uses Tennessee net worth, while the separate excise tax uses Tennessee taxable income. The published rates are 0.25% for franchise tax and 6.5% for excise tax. A taxable entity generally faces a $100 minimum franchise tax, subject to applicable exemptions and special rules. Tennessee tax rates, franchise and excise manual.
Federal pass-through or disregarded status does not automatically remove Tennessee franchise and excise obligations. Check the entity, ownership, activity and any claimed exemption before concluding that no return is required.
Tennessee LLC franchise tax versus excise tax
| Obligation | General calculation focus |
|---|---|
| Franchise tax | Tennessee net worth under the current rules |
| Excise tax | Tennessee taxable income after applicable adjustments |
| LLC annual report | Separate Secretary of State company filing |
These are not interchangeable fees. A company can have low taxable income while still needing to calculate franchise tax. Likewise, paying the Secretary of State does not pay either Department of Revenue tax.
Avoid the old property-measure calculation
Tennessee removed the property-based minimum measure from the franchise-tax calculation. Older guides may still compare net worth with the value of property or discuss a property-measure exclusion as though it were a deduction from net worth. That is not a safe current calculation. Use the current tax manual and the return for the actual period.
The excise tax also has its own deduction rules, including the standard $50,000 deduction from net earnings for qualifying periods. Do not subtract that amount from the franchise-tax net-worth base. Keep the two calculations on separate workpapers.
Prepare the records for both taxes
Gather the balance sheet, income statement, federal return, ownership details and records of Tennessee and out-of-state activity. Net worth is not the same as the bank balance. Owner loans, capital contributions, assets and liabilities should be recorded accurately before the state calculation begins.
For example, an LLC can hold valuable equipment and owe a loan while having modest cash. Sending only the checking-account balance cannot establish its franchise-tax base. The owner contributions versus loans guide helps organize part of that distinction.
File for the correct period
The annual franchise and excise return is generally due on the fifteenth day of the fourth month after the tax year closes; a calendar-year business ordinarily uses April 15. Estimated-payment and extension rules need separate review. Official due-date guidance.
Use the appropriate Department of Revenue filing account and current return instructions, retaining acceptance and payment confirmations. If claiming an exemption, document the eligibility and any required application or renewal rather than assuming the LLC label qualifies.
Maintain the company registration separately
The Tennessee LLC annual report and foreign LLC registration involve the Secretary of State. Keep those costs and deadlines separate from franchise and excise tax. If activity stops, review proper termination and final tax steps; an inactive business can still have unresolved filing obligations.
Use a qualified tax professional for the calculations and elections that apply to your facts. For a separate question about setting up a new LLC, contact PrimeRegister to discuss formation support.
