Highways, Roads and Bridges

Plain English Breakdown

The official summary text does not provide specific details about the exact impact of the allocations on municipalities' budgets.

Transportation Infrastructure Study and Funding Act

This bill requires a study of transportation infrastructure needs for future years and changes how revenue from vehicle sales is allocated to support highways and municipalities.

What This Bill Does

• Requires the Tennessee Department of Transportation to conduct a study on transportation infrastructure needs, costs, and funding sources for the years 2028, 2050, and 2075.
• Allocates 95.397% of sales tax revenue from new or used motor vehicles and tires to the highway fund starting October 1, 2026.
• Distributes 4.603% of the same revenue monthly to incorporated municipalities based on population.
• Prohibits certain educational funding revenues from being reallocated for transportation purposes.

Who It Names or Affects

• The Tennessee Department of Transportation
• Incorporated municipalities in Tennessee

Terms To Know

Highway Fund

A fund used to support the construction and maintenance of roads, bridges, and other transportation infrastructure.

Sales Tax Revenue

Money collected from taxes on sales of goods and services.

Limits and Unknowns

• The bill does not specify how the study findings will be used beyond reporting to legislative committees.
• It is unclear what specific changes, if any, will result from the study's recommendations.
• The exact impact on municipalities' budgets depends on their population and sales tax revenue.

Official Summary Text

This bill requires t
he department of transportation
to
direct
a
study
of
transportation infrastructure needs, costs, and funding sources for the years 2028, 2050, and 2075.

In conducting the study, the department must consider
e
xisting sources of revenue dedicated to transportation infrastructure, including the highway fund
, p
otential sources of existing
revenue not dedicated to transportation but derived substantially from transportation activities, and the impact of the bill's allocation of revenues rec
eived from the sale, use, consumption, distribution, or storage for use or consumption of new or used motor vehicles and new or used tires on or after October 1, 2026, on transportation
infrastructure needs.

The department
must
report findings and recommendations to
legislative
committee
s
by January 1, 2028.

ALLOCATIONS FROM TAXES ON CERTAIN MOTOR VEHICLES AND TIRES

This bill also reallocates the receipts for the monies received from the sale, use, consumption, or distribution of new or used tires on or after July 1, 2025, for the
t
ransportation equity trust fund as a special allocation by including revenues received from the sale, use, consumption, distribution, or storage for use or consumption of new or used motor vehicles and new or used tires on or after October 1, 2026.

Further, this bill makes the following allocations from
the sale, use, consumption,
distribution, or storage for use or consumption of new or used motor vehicles and new or used tires on or after October 1, 2026:



95.3970%
of revenues to be allocated to and deposited in the highway fund.



4.6030%
of revenues
to
be appropriated to the several incorporated municipalities within this state to be allocated and distributed to them monthly, in the proportion as the population of each municipality bears to the aggregate population of all municipalities within the state, according to the latest federal census and other censuses authorized by law.



A
ll revenue generated from the tax levied at the rate of 2.75% on the amount in excess of $1,600 but less than or equal to $3,200 to be allocated and deposited into the highway fund.

MUNICIPALITIES RECEIVING ALLOTMENTS

This bill provides that m
unicipalities incorporated
after
the last decennial federal census, until the next decennial federal census,
are
eligible for an allotment, commencing on July 1, following incorporation and the election and installation of officials, on the population basis determined under regulations of the department of economic and community development and certified by that of
fice to the commissioner provided that an accurate census of population has been certified to the department of economi
c and community development by the municipality.

Municipalities participating in allocation
must
continue to do so on the basis of their population determined according to law.

PROHIBITED REVENUE

This bill prohibits any
portion of the revenue derived from the increase in the rate of sales and use tax allocated to educational purposes, and
any
portion of the revenue derived from the increase in the rate of
sales and use tax from 6% to 7%
from being
apportioned and distributed.

Such
revenue must be allocated
as provided in
present law.

Current Bill Text

SENATE BILL 1642
By Walley

HOUSE BILL 1683
By Hawk
HB1683
010924
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 4;
Title 54; Title 55; Title 65 and Title 67, relative to
transportation.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 54, Chapter 1, Part 1, is amended by
adding the following as a new section:
54-1-105.
(a) The department of transportation is directed to study transportation
infrastructure needs, costs, and funding sources for the years 2028, 2050, and 2075.
(b) In conducting the study, the department must consider:
(1) Existing sources of revenue dedicated to transportation infrastructure,
including the highway fund;
(2) Potential sources of existing revenue not dedicated to transportation
but derived substantially from transportation activities; and
(3) The impact of Section 2 of this act on transportation infrastructure
needs.
(c) The department shall report findings and recommendations to the chairs of
the transportation and safety committee of the senate and the committee in the house of
representatives having jurisdiction over transportation by January 1, 2028.
SECTION 2. Tennessee Code Annotated, Section 67-6-103, is amended by deleting
subsection (v) and substituting instead:
(v)

- 2 - 010924

(1) As used in this subsection (v), "motor vehicle" and "tire" have the
same meanings as defined in § 67-4-1602.
(2)
(A) Notwithstanding the allocations provided for in subsection (a),
ninety-five and three thousand nine hundred seventy ten-thousandths
percent (95.3970%) of revenues 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 on or after October 1,
2026, must be allocated to and deposited in the highway fund.
(B) Four and six thousand thirty ten-thousandths percent
(4.6030%) of revenues 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 on or after October 1, 2026,
must be appropriated to the several incorporated municipalities within this
state to be allocated and distributed to them monthly, in the proportion as
the population of each municipality bears to the aggregate population of
all municipalities within the state, according to the latest federal census
and other censuses authorized by law. Municipalities incorporated
subsequent to the last decennial federal census shall, until the next
decennial federal census, be eligible for an allotment, commencing on
July 1, following incorporation and the election and installation of officials,
on the population basis determined under regulations of the department
of economic and community development and certified by that office to
the commissioner; provided, that an accurate census of population has
been certified to the department of economic and community

- 3 - 010924

development by the municipality. Municipalities participating in allocation
shall continue to do so on the basis of their population determined
according to law.
(3) Notwithstanding the allocation provided for in subdivision (c)(1), all
revenue generated from the tax levied at the rate of two and three quarters
percent (2.75%) on the amount in excess of one thousand six hundred dollars
($1,600) but less than or equal to three thousand two hundred dollars ($3,200)
from the sale, use, consumption, distribution, or storage for use or consumption
of new or used motor vehicles and new or used tires on or after October 1, 2026,
must be allocated to and deposited in the highway fund.
(4) Notwithstanding this subsection (v) to the contrary, no portion of the
revenue derived from the increase in the rate of sales and use 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 and
use 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 3. This act takes effect October 1, 2026, the public welfare requiring it.