- Tennessee F&E rates at a glance
- Who has to pay Tennessee franchise and excise tax
- The $100 minimum for inactive companies
- Tennessee F&E due dates
- What changed in 2024: the property measure is gone
- The family-owned exemption (FONCE)
- What the excise tax is measured on
- Don't confuse F&E with Tennessee business tax
- My verdict on Tennessee F&E
- Frequently asked questions
Tennessee's franchise tax is 0.25% of Tennessee net worth and its excise tax is 6.5% of Tennessee taxable income, as of October 2026. Corporations, LLCs, limited partnerships and business trusts registered in Tennessee or doing business there must register for and pay both, and the minimum franchise tax is $100 even if the company is inactive.
The franchise and excise taxes, usually called F&E, are two taxes filed together, and the minimum is the detail that catches people with a dormant company.
Tennessee F&E rates at a glance
From the Department of Revenue's due dates and rates page, as of October 2026:
| Tax | Rate | Measured on |
|---|---|---|
| Franchise tax | 0.25% | Tennessee net worth |
| Excise tax | 6.5% | Tennessee taxable income |
The franchise tax is based on net worth: total assets less total liabilities, taken from the business's own books and records. The excise tax is based on the taxpayer's net earnings or income for the tax year.
Who has to pay Tennessee franchise and excise tax
If you're a corporation, limited partnership, limited liability company or business trust that's chartered, qualified or registered in Tennessee, or doing business in the state, you must register for and pay F&E. Sole proprietorships aren't on that list.
The $100 minimum for inactive companies
This is the part people miss. The Department of Revenue says the minimum franchise tax is $100, as of October 2026, and it's payable if you're incorporated, domesticated, qualified or otherwise registered through the Secretary of State to do business in Tennessee, whether the company is active or inactive. An LLC you formed and never used still owes the minimum every year until you close it.
Tennessee F&E due dates
| Item | When |
|---|---|
| Annual return | 15th day of the fourth month after your books close. For a calendar year, April 15 of the following year. |
| Quarterly estimated payments | 15th day of the fourth, sixth and ninth months of the tax year, and the 15th day of the first month of the next tax year |
| Extension | Seven months |
Quarterly estimates apply if your combined tax liability is $5,000 or more in both the prior and current years, as of October 2026.
What changed in 2024: the property measure is gone
On May 10, 2024, Governor Bill Lee signed Public Chapter 950 (2024). It eliminated the property measure from the franchise tax calculation for tax years ending on or after January 1, 2024. That's why the franchise tax is now described simply as a percentage of net worth.
The same law opened a limited window for refunds of franchise tax paid on the property measure, known as Schedule G, for certain earlier periods. Claims had to be filed between May 15, 2024 and December 2, 2024, with amended returns and a special claim form. That window has closed, so if you're reading old advice about Schedule G refunds, it no longer applies.
The family-owned exemption (FONCE)
Some family-owned non-corporate entities are exempt from F&E. To qualify, the entity must meet both of these:
- At least 95% of the voting rights, capital interest or profits are owned by relatives, by trusts for their benefit, or by the estate of a deceased relative.
- Substantially all, meaning 66.67%, of its activity is producing passive investment income, or passive investment income combined with farming.
Passive investment income includes royalties, rents from residential or farm property, dividends, interest, annuities and gains on selling stock or securities. Residential property can't have more than four residential units at any one location. You must file an application for the exemption, and renew it every year.
The yearly filing is explained in the annual report guide for Tennessee.
What the excise tax is measured on
The excise tax is based on the taxpayer's net earnings or income for the tax year, and the rate is 6.5% of Tennessee taxable income, as of October 2026. The franchise tax runs alongside it on net worth, so a business with little profit but a healthy balance sheet still has a franchise tax bill, and a business that's barely started still owes the $100 minimum.
Both taxes go on one return, due on the same date, with the same seven-month extension. An extension gives you more time to file, so plan the payment side with your accountant before April 15 if you're on a calendar year.
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Don't confuse F&E with Tennessee business tax
Tennessee also has a separate business tax, with rates that vary by classification and by whether you're a retailer or a wholesaler. Its return is also due on the 15th day of the fourth month after your fiscal year ends, and every taxpayer pays at least a minimum tax of $22, as of October 2026. My guide to a Tennessee business license covers that side, and Tennessee sales tax is a third, separate registration if you sell taxable goods.
My verdict on Tennessee F&E
Tennessee keeps the headline numbers simple: 0.25% of net worth and 6.5% of taxable income, as of October 2026. The trap is the $100 minimum on a dormant entity, so close companies you don't use rather than leave them registered. If you also operate in Texas, its franchise tax works on a different basis, so don't assume the rules carry over.
Frequently asked questions
What is the Tennessee franchise tax rate?
The franchise tax is 0.25% of Tennessee net worth, as of October 2026.
What is the Tennessee excise tax rate?
The excise tax is 6.5% of Tennessee taxable income, as of October 2026.
Do LLCs pay Tennessee franchise and excise tax?
Yes. Corporations, LLCs, limited partnerships and business trusts registered in Tennessee or doing business there must register for and pay it.
What is the minimum Tennessee franchise tax?
The minimum franchise tax is $100, payable by any entity registered through the Secretary of State, whether it's active or inactive.
When is the Tennessee franchise and excise tax return due?
On the 15th day of the fourth month after the close of your books, which is April 15 for a calendar year. A seven-month extension is available.
Can I still claim a Tennessee Schedule G franchise tax refund?
No. Refund claims for franchise tax paid on the property measure had to be filed between May 15, 2024 and December 2, 2024.
Who qualifies for the Tennessee FONCE exemption?
A family-owned non-corporate entity at least 95% owned by relatives, with at least 66.67% of its activity from passive investment income or passive income and farming. It must apply and renew each year.
Is the Tennessee franchise tax still based on property?
No. Public Chapter 950 (2024) eliminated the property measure for tax years ending on or after January 1, 2024.
