Tennessee Franchise & Excise Tax — LLC Guide

The franchise & excise (F&E) tax is Tennessee's primary business tax. It applies to all LLCs doing business in Tennessee — regardless of whether the LLC has elected pass-through, S-corp, or C-corp treatment. Minimum $300 annually. For the full tax guide. For formation, see how to form a Tennessee LLC.

Two Components

Excise Tax: 6.5% of Net Income

• Applied to Tennessee net income (calculated similarly to federal taxable income with Tennessee adjustments)
• All LLC structures pay this — even S-corp-elected LLCs
• No separate minimum — combined F&E minimum of $300 applies
• Deductions: Federal deductions generally flow through, with Tennessee modifications

Franchise Tax: 0.25% of Net Worth/Property

• Applied to the GREATER of:
• Net worth (equity/capital accounts), OR
• Real and tangible property owned/used in Tennessee
• No separate minimum — combined F&E minimum of $300 applies
• For single-member LLCs with minimal property: the $300 combined minimum applies

Combined Minimum: $300

Even if both calculations produce less than $300, you owe $300.

Filing Requirements

• Form: FAE 170 (Franchise and Excise Tax Return)
• Filed with: Tennessee Department of Revenue (revenue.tn.gov)
• Portal: TNTAP (Tennessee Taxpayer Access Point) at tntap.tn.gov
• Due date: 15th day of the 4th month after fiscal year end (April 15 for calendar-year LLCs)
• Extension: Available (extends filing deadline, NOT payment deadline)

Quarterly Payments

If your estimated F&E liability exceeds $5,000, Tennessee requires quarterly estimated payments:

• Due: 15th of months 4, 6, 9, and 12 of fiscal year
• Underpayment penalty applies

Examples

Single-member LLC, $80,000 net income, $10,000 net worth:

• Excise: $80,000 × 6.5% = $5,200
• Franchise: $10,000 × 0.25% = $25 (below threshold — $300 combined minimum applies)
• Total F&E: $5,300

Single-member LLC, $0 net income, $5,000 property:

• Excise: $0 × 6.5% = $0 (below threshold — $300 combined minimum applies)
• Franchise: $5,000 × 0.25% = $12.50 (below threshold — $300 combined minimum applies)
• Combined minimum applies: $300

FAQ

Does the F&E apply to S-corp elected LLCs?

Yes. Tennessee assesses F&E on ALL entities regardless of federal tax election. This is a critical difference from most states where S-corps escape entity-level tax.

Can I reduce my F&E liability?

The excise tax reduces with lower net income (deductions reduce taxable income). The franchise tax reduces with lower net worth/property. However, you always owe at least $300.

Is it deductible on federal taxes?

Yes. The F&E tax is deductible as a business expense on your federal return (Schedule C, Form 1065, etc.).