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SB0002 • 2026

Taxes

AN ACT to amend Tennessee Code Annotated, Title 57 and Title 67, relative to taxation.

Education Taxes
Active

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

Sponsor
Oliver, Behn
Last action
2026-04-14
Official status
Placed on Senate Finance, Ways, and Means Committee calendar for 4/21/2026
Effective date
Not listed

Plain English Breakdown

The bill summary and text do not provide details about the exact impact on education funding or local government budgets.

End Grocery Tax by Closing Corporate Loopholes Act

This bill removes sales tax on groceries and changes how revenue from taxes is allocated.

What This Bill Does

  • Eliminates the 4% sales tax on food items for human consumption, excluding alcohol, tobacco, candy, dietary supplements, and prepared foods.
  • Removes a requirement that part of grocery tax revenue be set aside for education funding in K-12 schools.
  • Makes permanent the allocation based on exempt sales during a specific period to local governments.

Who It Names or Affects

  • People who buy groceries and food items.
  • Schools that rely on funding from grocery tax revenue.
  • Local governments receiving money from taxes.

Terms To Know

Commissioner of Revenue
The person in charge of collecting and managing state revenue, including taxes.
State General Fund
A fund that holds money collected by the government for general use.

Limits and Unknowns

  • It is unclear how much money will be lost from education funding.
  • The bill does not specify what happens to the revenue previously set aside for K-12 schools.
  • Local governments may need to adjust their budgets based on changes in tax allocations.

Bill History

  1. 2026-04-14 Tennessee General Assembly

    Placed on Senate Finance, Ways, and Means Committee calendar for 4/21/2026

  2. 2025-04-17 Tennessee General Assembly

    Placed on Senate Finance, Ways, and Means Committee calendar for 4/21/2025

  3. 2025-04-14 Tennessee General Assembly

    Placed on Senate Finance, Ways, and Means Committee calendar for 4/15/2025

  4. 2025-04-14 Tennessee General Assembly

    Rule #83(8) Suspended, to be heard in Senate Finance, Ways & Means Committee on 4/15/2025

  5. 2025-03-19 Tennessee General Assembly

    Def. to Summer Study in Finance, Ways, and Means Subcommittee

  6. 2025-03-18 Tennessee General Assembly

    Refer to Senate Finance, Ways & Means Committee w/ negative recommendation

  7. 2025-03-12 Tennessee General Assembly

    Placed on s/c cal Finance, Ways, and Means Subcommittee for 3/19/2025

  8. 2025-03-11 Tennessee General Assembly

    Placed on Senate FW&M Revenue Subcommittee calendar for 3/18/2025

  9. 2025-02-24 Tennessee General Assembly

    Sponsor(s) Added.

  10. 2025-02-18 Tennessee General Assembly

    Sponsor(s) Added.

  11. 2025-02-18 Tennessee General Assembly

    Refer to Senate F,W&M Revenue Subcommittee

  12. 2025-02-05 Tennessee General Assembly

    Sponsor(s) Added.

  13. 2025-01-28 Tennessee General Assembly

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

  14. 2025-01-28 Tennessee General Assembly

    Ref. to Finance, Ways, and Means Committee

  15. 2025-01-15 Tennessee General Assembly

    Passed on Second Consideration, refer to Senate Finance, Ways, and Means Committee

  16. 2025-01-15 Tennessee General Assembly

    P2C held on desk, pending appointment of Standing Committees

  17. 2025-01-14 Tennessee General Assembly

    Introduced, Passed on First Consideration

  18. 2025-01-14 Tennessee General Assembly

    Intro., P1C.

  19. 2024-12-11 Tennessee General Assembly

    Sponsor(s) Added.

  20. 2024-11-20 Tennessee General Assembly

    Sponsor(s) Added.

  21. 2024-11-12 Tennessee General Assembly

    Filed for introduction

  22. 2024-11-06 Tennessee General Assembly

    Filed for introduction

Official Summary Text

This bill enacts the
"End the Grocery Tax by Closing Corporate Loopholes Act
," which generally eliminates the 4% sales tax on
the retail sale of food and food ingredients

for human consumption
("groceries"). However, "
food and food ingredients
"
does not include alcoholic beverages, tobacco, candy, dietary supplements, or prepared
food
.

REVENUE IMPLICATIONS

Education

Present law requires the
commissioner of revenue
("commissioner") to
deposit
r
evenue generated from 0.5%
of the tax rate
placed on groceries

into
the state general fund
and earmark it for
education purposes
for

kindergarten through grade twelve (K-12) regardless of whether the tax rate
on groceries
is reduced below 6%.
This bill removes this provision.

Counties and Municipalities

Present law requires the commissioner to
allocate and distribute to counties
and municipalities an amount substantially equal to the amount that would have been allocated but for the temporary exemption from sales tax applicable to the retail sale of
groceries
between 12:01 a.m. on August 1, 2023, and 11:59 p.m. on October 31, 2023
.
The allocation provided

must be based on the reporting of exempt sales of
groceries
during the exemption period and any other data or information the commissioner deems relevant.
This bill removes the temporary nature of this provision and makes the al
location permanent.

Current Bill Text

Read the full stored bill text 
HOUSE BILL 2
By Behn

SENATE BILL 2
By Oliver

SB0002
000212
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 57
and Title 67, relative to taxation.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. This act is known and may be cited as the "End the Grocery Tax by
Closing Corporate Loopholes Act."
SECTION 2. Tennessee Code Annotated, Section 67-6-228(a), is amended by deleting
the subsection and substituting instead the following:
(a) Notwithstanding this chapter to the contrary, except as otherwise provided in
subsection (b), the retail sale of food and food ingredients shall not be taxed.
SECTION 3. Tennessee Code Annotated, Section 67-6-103(c)(2), is amended by
deleting the following language:
Revenue generated from one-half percent (0.5%) of the tax rate provided in § 67-6-228
shall continue to be deposited in the state general fund and earmarked for education
purposes in kindergarten through grade twelve (K-12) regardless of whether the tax rate
provided in § 67-6-228 is reduced below six percent (6%).
SECTION 4. Tennessee Code Annotated, Section 67-6-103(u), is amended by deleting
the subsection and substituting instead the following:
(u) Notwithstanding the allocations provided for in subsection (a), there must be
allocated and distributed to the counties and municipalities an amount substantially
equal to the amount that would have been allocated to the counties and municipalities
under subdivision (a)(3) but for the exemption from sales tax applicable to the retail sale
of food and food ingredients. The allocation provided in this subsection (u) must be

- 2 - 000212

based on the reporting of exempt sales of food and food ingredients and any other data
or information the commissioner deems relevant.
SECTION 5. Tennessee Code Annotated, Section 67-6-329(a), is amended by adding
the following as a new, appropriately designated subdivision:
( ) Food and food ingredients;
SECTION 6. Tennessee Code Annotated, Section 67-6-329(a)(18), is amended by
deleting the language "or food and food ingredients".
SECTION 7. Tennessee Code Annotated, Section 67-6-229, is amended by deleting the
language "food and food ingredients or".
SECTION 8. Tennessee Code Annotated, Section 57-3-802(1), is amended by deleting
the language "that derives at least twenty percent (20%) of its sales taxable sales from the retail
sale of food and food ingredients for human consumption taxed at the rate provided in § 67-6-
228(a)" and substituting instead the language "that derives at least twenty percent (20%) of its
sales from the retail sale of food and food ingredients for human consumption".
SECTION 9. Tennessee Code Annotated, Section 57-3-806(d)(1), is amended by
deleting the language "must maintain a minimum of twenty percent (20%) of the licensee's sales
taxable sales from the retail sale of food and food ingredients for human consumption taxed at
the rate provided in § 67-6-228(a)" and substituting instead the language "must maintain a
minimum of twenty percent (20%) of the licensee's sales from the retail sale of food and food
ingredients for human consumption".
SECTION 10. This act takes effect July 1, 2025, the public welfare requiring it.