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HB0963 • 2026

Taxes, Sales

AN ACT to amend Tennessee Code Annotated, Title 9; Title 54; Title 55 and Title 67, relative to the allocation of sales tax revenue for the highway fund.

Education Taxes
Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor
Hawk, Pody
Last action
2025-03-05
Official status
Sponsor(s) Added.
Effective date
Not listed

Plain English Breakdown

Checked against official source text during the last sync.

Tennessee Highway Fund Sales Tax Allocation Act

This bill changes how Tennessee allocates sales tax revenue from car and tire purchases to fund highways.

What This Bill Does

  • Defines 'base tax revenues' as the amount of state sales tax collected on new or used cars and tires in the last fiscal year before the highway fund gets extra money.
  • Requires that any additional sales tax collected beyond this base amount from car and tire purchases be given to the highway fund starting July 1, 2025.
  • Excludes certain increases in sales tax rates for education purposes or a specific rate increase from being included in the highway fund allocation.

Who It Names or Affects

  • People who buy new or used cars and tires in Tennessee will see their sales tax contributions to the highway fund change.
  • The state government, particularly the Department of Transportation, will receive additional funding for highways.

Terms To Know

Base Tax Revenues
The amount of sales tax collected from car and tire purchases in the last fiscal year before extra money is allocated to the highway fund.
Incremental Increase
Additional revenue generated from sales tax on cars and tires beyond what was collected in the previous fiscal year.

Limits and Unknowns

  • The bill does not specify how much extra money will go to the highway fund each year.
  • It is unclear if there are any limits or caps on how much additional revenue can be allocated to the highway fund.

Bill History

  1. 2026-02-18 Tennessee General Assembly

    Assigned to General Subcommittee of Senate Transportation and Safety Committee

  2. 2026-02-11 Tennessee General Assembly

    Placed on Senate Transportation and Safety Committee calendar for 2/18/2026

  3. 2025-03-05 Tennessee General Assembly

    Sponsor(s) Added.

  4. 2025-02-11 Tennessee General Assembly

    Assigned to s/c Finance, Ways, and Means Subcommittee

  5. 2025-02-10 Tennessee General Assembly

    P2C, ref. to Finance, Ways, and Means Committee

  6. 2025-02-06 Tennessee General Assembly

    Intro., P1C.

  7. 2025-02-05 Tennessee General Assembly

    Filed for introduction

  8. 2025-01-15 Tennessee General Assembly

    Passed on Second Consideration, refer to Senate Transportation and Safety Committee

  9. 2025-01-14 Tennessee General Assembly

    Introduced, Passed on First Consideration

  10. 2025-01-02 Tennessee General Assembly

    Filed for introduction

Official Summary Text

Abstract summarizes the bill.

Current Bill Text

Read the full stored bill text 
SENATE BILL 24
By Pody

HOUSE BILL 963
By Hawk

HB0963
000013
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 9;
Title 54; Title 55 and Title 67, relative to the
allocation of sales tax revenue for the highway
fund.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-6-103, is amended by adding the
following as a new subsection:
(v)
(1) As used in this subsection (v):
(A) "Base tax revenues" means the revenues generated from the
collection of state sales tax from the sale, use, consumption, distribution,
or storage for use or consumption of new or used motor vehicles and new
or used tires as of the end of the fiscal year of this state immediately prior
to the year in which the highway fund is entitled to receive an allocation of
tax revenue pursuant to this subsection (v); and
(B) "Motor vehicle" and "tire" have the same meanings as defined
in § 67-4-1602.
(2) Notwithstanding the allocations provided for in subsection (a), on July
1, 2025, and on July 1 of each subsequent year, an amount of state sales tax
received under this chapter from the sale, use, consumption, distribution, or
storage for use or consumption of new or used motor vehicles and new or used
tires in excess of base tax revenues must be allocated to and deposited in the

- 2 - 000013

highway fund in an amount equal to the incremental increase in such state sales
tax in excess of base tax revenues.
(3) Notwithstanding this subsection (v) to the contrary, no portion of the
revenue derived from the increase in the rate of sales tax allocated to
educational purposes, pursuant to chapter 529, § 9 of the Public Acts of 1992,
and no portion of the revenue derived from the increase in the rate of sales tax
from six percent (6%) to seven percent (7%), pursuant to chapter 856, § 4 of the
Public Acts of 2002, must be apportioned and distributed pursuant to this
subsection (v). The revenue must be allocated as provided in chapter 529, § 9 of
the Public Acts of 1992, and chapter 856, § 4 of the Public Acts of 2002,
respectively.
SECTION 2. This act takes effect July 1, 2025, the public welfare requiring it.