Who must pay business tax?

Generally, if you conduct business within any county and/or incorporated municipality in Tennessee, then you should register for and pay business tax. Business tax consists of two separate taxes: the state business tax and the city business tax.

All businesses must pay the state business tax. This includes businesses with a physical location in the state as well as out-of-state businesses performing certain activities in the state.

Also, if you have a physical location where you conduct business in a city that has enacted a business tax, then you must pay the city business tax as well. Under these circumstances, you must file two separate tax returns. View the attachment below for a list of cities that have a business tax.