Answer
Tennessee levies zero state income tax on cleaning profits but taxes commercial janitorial services at combined rates of 9.25% to 9.75%, requiring sales tax collection on every invoice.
- Commercial cleaning is taxable under TCA § 67-6-205; a $6,000 monthly invoice triggers approximately $555 in sales tax.
- Workers' comp is mandatory at five employees; janitorial workers use NCCI code 9014.
- E-Verify is required for employers with 35 or more employees under the Lawful Employment Act.
9.25% to 9.75% combined sales tax on janitorial services
Tennessee offers commercial cleaning contractors a highly favorable tax environment — no state income tax after elimination of the Hall Income Tax in 2021, right-to-work since 1947, and strong commercial real estate demand across Nashville, Memphis, and Knoxville. The compliance obligation that most frequently surprises out-of-state BSCs is that Tennessee taxes commercial janitorial services under Tennessee Code Annotated § 67-6-205, unlike most southeastern states where cleaning labor is exempt.
No State Income Tax — Tennessee's Post-Hall Tax Advantage
Tennessee eliminated the Hall Income Tax on investment income effective January 1, 2021, and has never imposed a wage or earned-income tax. Sole proprietors, LLC members, S-corp shareholders, and individual employees all pay zero Tennessee income tax on business profits or wages. Tennessee does impose a 6.5% corporate excise tax and a 0.25% franchise tax on C-corporations. Pass-through income from LLCs, partnerships, and S-corps is fully exempt from Tennessee personal income tax. Register for Tennessee business tax through the Tennessee Taxpayer Access Point (TNTAP), administered by the Tennessee Department of Revenue, 500 Deaderick Street, Nashville, TN 37242, (615) 253-0600.
Sales Tax on Janitorial Services — TCA § 67-6-205
Commercial janitorial services are taxable in Tennessee. Under Tennessee Code Annotated § 67-6-205(c)(5) and Tennessee DOR Revenue Support SUT-115, cleaning of commercial property is a taxable service. Tennessee's combined state-plus-local sales tax rate is among the nation's highest: the state rate is 7% and local county rates add up to 2.75%, bringing combined rates to 9.25%–9.75% across most of Tennessee. A BSC charging $6,000/month to a Nashville office building must collect approximately $555 in Tennessee sales tax on that invoice. Register for a sales tax permit at TNTAP before invoicing the first Tennessee commercial client. Coin-operated and residential-only cleaning arrangements may qualify for narrower exemptions under Tennessee administrative guidance.
E-Verify — Tennessee Lawful Employment Act
Tennessee's Lawful Employment Act (TCA §§ 50-1-701–50-1-715), signed June 7, 2011, requires all employers to verify employment eligibility for new hires. Private employers with 35 or more employees must use E-Verify for all new hires and comply with federal I-9 requirements. Smaller employers (under 35) may use E-Verify or retain documentary verification under Tennessee's authorized document list. Per E-Verify state requirements tracking, Tennessee is classified in the "all or most employers" tier for practical purposes. Non-compliance can result in suspension of Tennessee-issued business licenses by the Department of Commerce and Insurance. E-Verify records must be retained for three years from hire or one year after termination.
Tennessee Right-to-Work Law
Tennessee has been a right-to-work state since 1947 under TCA § 50-1-201. No employer may require union membership or financial support as a condition of employment. Tennessee's right-to-work status — combined with no income tax and a low cost of living — makes the state highly attractive for scaling cleaning operations southward from higher-labor-cost midwestern states. Tennessee's minimum wage follows the federal $7.25/hour floor.
Workers' Compensation — Five-Employee Threshold
Tennessee workers' compensation is administered by the Tennessee Bureau of Workers' Compensation (BWC), 220 French Landing Drive, Nashville, TN 37243, (615) 532-4812 / (800) 332-2667. Coverage is mandatory for employers with five or more employees, including part-time and seasonal workers. Cleaning companies with four or fewer employees are exempt from mandatory coverage (though voluntary coverage is available). Coverage is placed with private admitted carriers — Tennessee has no monopolistic state fund. Janitorial workers use NCCI code 9014. Tennessee WC benefits provide 66.67% of average weekly wages; disputes are resolved by the Court of Workers' Compensation Claims. Sole proprietors may elect coverage under TCA § 50-6-902.
Tennessee Department of Labor — Unemployment Insurance
Tennessee UI is administered by the Tennessee Department of Labor and Workforce Development (TDLWD), 220 French Landing Drive, Nashville, TN 37243, (615) 741-2486. Employers become liable once they pay $1,500 in wages in any quarter or employ one or more workers for 20 weeks. The taxable wage base is $7,000 per employee. New employer UI rate: approximately 2.7%. Experienced rates range from 0.01% to 10.0%. Register through the TDLWD Employer Portal. Quarterly reports and payments are due the last day of the month after each quarter.
Business Registration and Local Licensing
Tennessee businesses register with the Tennessee Secretary of State, 312 Rosa L. Parks Avenue, 6th Floor, Nashville, TN 37243, (615) 741-2286. LLC Articles of Organization cost $50 per member (capped at $3,000); corporations file a Charter for $100 minimum. Tennessee requires a county Business License under TCA § 67-4-723 ($15 annually per location). Metro Nashville requires a Metro Business License ($22/year minimum); Memphis requires a City Business Tax License. State facility contracts are procured through the Central Procurement Office (CPO) using the Edison system, requiring $1 million per occurrence general liability and 5% performance bonds.
Independent Contractor Classification and Chemical Notes
Tennessee uses a common-law right-to-control test — no ABC test. The TDLWD and Tennessee BWC audit cleaning companies with 1099-heavy workforces; a crew member using company equipment, following company schedules, and working exclusively for one BSC is almost certainly an employee regardless of labeling. Tennessee has not enacted PFAS restrictions on cleaning products. BSCs handling quaternary ammonium compounds must comply with EPA's antimicrobial pesticide registration under FIFRA. Federal OSHA Region IV (Atlanta) covers Tennessee private workplaces; annual HazCom training and SDS binders are required.
Local / metro cleaning business licenses
City and metro rules sit on top of Tennessee statewide requirements. Use the state sections above for entity, workers’ compensation, and tax — then open the metro page for municipal fees and agencies.
| Metro | Focus | Link |
|---|---|---|
| Nashville | Municipal / occupational license requirements for cleaning companies | Open city page |
| Memphis | Municipal / occupational license requirements for cleaning companies | Open city page |
Primary sources
Tennessee Code § 67-6-205 — Services Subject to Sales Tax
Tennessee DOR — SUT-115 Services Subject to Sales Tax
Tennessee Lawful Employment Act — MTAS
Disclaimer & review notice
This content is maintained by the Opora editorial team and last reviewed in Q2 2026. State licensing rules, fees, and tax treatments change frequently — verify current details directly with the named state agency before relying on any specific dollar amount or threshold. Opora does not provide legal or tax advice; this page is a starting point for further due diligence.
- OSHA Compliance for Janitorial in Tennessee →
- Workers' Comp Class 9014 in Tennessee →
- Janitorial Wages in Tennessee →