Taxes, Sales

Plain English Breakdown

The official source material does not provide specific financial impacts or implementation dates, leaving these details uncertain.

Tennessee Sales Tax Exemption for Labor and Services

This bill changes Tennessee's sales tax rules to exclude labor costs from the taxable amount when they are listed separately on an invoice.

What This Bill Does

• Changes how sales tax is calculated by excluding labor costs if they are shown separately on a receipt or billing document.
• Makes repair services for tangible personal property and computer software exempt from sales tax.
• Exempts installation charges for tangible personal property and computer software when these services are charged separately, regardless of whether the items are sold with them.
• Removes existing rules that taxed labor performed outside Tennessee if the item was delivered within the state.

Who It Names or Affects

• Businesses providing repair or installation services in Tennessee.
• Customers buying products and services subject to these changes.

Terms To Know

Sales Tax

A tax charged by the government on the sale of goods and services.

Tangible Personal Property

Physical items that can be touched, like furniture or electronics.

Limits and Unknowns

• The bill does not specify how much money it will save for businesses or consumers.
• It is unclear when the bill will become law and start affecting sales tax calculations.
• The exact impact on Tennessee's state revenue from reduced sales taxes is not detailed.

Official Summary Text

For purposes of determining sales tax, present law defines a "s
ales price
" as the amount
subject to sales tax without any deduction
for several types of costs, including
labor or service cost
s and i
nstallation charges
. This bill provides that l
abor and service costs, including repair and installation labor charges, that are separately stated on an invoice or similar billing document given to the purchaser
are not included in the "sales price". Additionally, this bill makes the following services untaxabl
e for sales tax purposes:



The performing, for a consideration, of any repair services with respect to any kind of tangible personal property or computer software
.



The installing of tangible personal property that remains tangible personal property after installation and the installing of computer software, where a charge is made for the installation, whether or not the installation is made as an incident to the sale of tangible personal property or computer software, and whether or not any tangible personal property or computer software is transferred in conjunction with the installation service
.

Present law provides that a
tax is levied at the rate of the tax levied on the sale of tangible personal property at retail on the repairing of tangible personal property or computer software, the laundering or dry cleaning of tangible personal property, the installing of tangible
personal property that remains tangible personal property after installation, and the installing of computer software, when such repair, cleaning, or installation occurs at a place of business outside this state and the serviced
tangible personal property or computer software is delivered by the seller to the purchaser or the purchaser's designee within the physical limits of this state or to a carrier for delivery to a place inside the physical limits of this state for use or co
nsumption in this state.
This bill removes this provision given the changes described above.

Current Bill Text

SENATE BILL 1465
By Lowe

HOUSE BILL 1682
By Reeves
HB1682
008774
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 67,
Chapter 6, relative to the taxation of labor
performed on tangible personal property.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-6-102(87)(A)(ii), is amended by
deleting the language "labor or service cost,".
SECTION 2. Tennessee Code Annotated, Section 67-6-102(87)(A), is amended by
deleting subdivision (v) and renumbering the subsequent subdivision accordingly.
SECTION 3. Tennessee Code Annotated, Section 67-6-102(87)(B), is amended by
adding the following as a new subdivision:
(v) Labor and service costs, including repair and installation labor charges, that
are separately stated on an invoice or similar billing document given to the purchaser;
SECTION 4. Tennessee Code Annotated, Section 67-6-205(c), is amended by deleting
subdivisions (4) and (6) and renumbering the remaining subdivisions accordingly.
SECTION 5. Tennessee Code Annotated, Section 67-6-203, is amended by deleting
subsection (d).
SECTION 6. For the purpose of promulgating rules, this act takes effect upon becoming
a law, the public welfare requiring it. For all other purposes, this act takes effect July 1, 2026,
the public welfare requiring it.