Tennessee

Tennessee Franchise Tax Guide for LLCs

Complete 2026 guide to Tennesseefranchise tax — rates, due dates, filing forms, exemptions, and how to minimize your LLC's state tax burden.

Does Tennessee have franchise tax on LLCs?

Yes — $100/yr franchise + 6.5% excise on net earnings

Tennessee Franchise Tax Structure

How it's calculated

Franchise tax: 0.25% of greater of net worth or real/tangible property (minimum $100). Excise tax: 6.5% of net earnings.

Due date

15th day of 4th month after fiscal year-end (April 15 for calendar year)

Filing form

Form FAE-170 (Tennessee Franchise and Excise Tax Return)

Key Things to Know About Tennessee Franchise Tax

Tennessee has NO personal income tax — but this F&E tax replaces it for entities
6.5% excise on net earnings is among the highest state entity tax rates
Small LLCs often still owe $100 minimum even with $0 profit

Possible Exemptions

Family-owned non-corporate entities meeting specific rules
Certain REITs and passive holding companies

Verify eligibility with a CPA or the Tennessee Department of Revenue before claiming an exemption.

FAQ

Does my LLC owe franchise tax in Tennessee?

Yes. Tennessee imposes franchise tax or equivalent: Franchise tax: 0.25% of greater of net worth or real/tangible property (minimum $100). Excise tax: 6.5% of net earnings.

When is Tennessee franchise tax due?

15th day of 4th month after fiscal year-end (April 15 for calendar year). Missed deadlines typically trigger penalties, interest, and loss of good standing. Always mark your calendar or use FormifyAI's compliance reminder service.

How do I file franchise tax in Tennessee?

Form FAE-170 (Tennessee Franchise and Excise Tax Return). Most states now offer online filing through their Department of Revenue or Secretary of State portal. Payment can usually be made by ACH, credit card, or check.

What happens if I don't pay Tennessee franchise tax?

Failure to pay triggers: monetary penalties + interest on unpaid amounts, loss of good standing with the state, inability to file lawsuits or enforce contracts, and eventual administrative dissolution of the LLC. Administrative dissolution can retroactively pierce liability protection.

Can I avoid Tennessee franchise tax by forming elsewhere?

Generally no. If your LLC operates in Tennessee (has employees, office, or significant activity there), you'll owe Tennessee state taxes regardless of formation state. Forming in Delaware or Wyoming to "avoid" Tennessee taxes typically costs MORE (both states' fees) while providing no real tax benefit.

Are there exemptions from Tennessee franchise tax?

Possible exemptions: Family-owned non-corporate entities meeting specific rules; Certain REITs and passive holding companies. Consult a CPA familiar with Tennessee tax law for your specific situation.

Stay compliant with Tennessee franchise tax

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FAQ

Does my LLC owe franchise tax in Tennessee?

Yes. Tennessee imposes franchise tax or equivalent: Franchise tax: 0.25% of greater of net worth or real/tangible property (minimum $100). Excise tax: 6.5% of net earnings.