Taxes, Sales

Plain English Breakdown

The official source does not specify which municipalities will receive the allocated funds, only that they are certain incorporated ones in Tennessee.

Changing How Sales Tax Revenue is Distributed

This bill changes how revenue from increasing the sales and use tax rate from 6% to 7% is distributed by allocating a portion of it to certain municipalities in Tennessee.

What This Bill Does

• Removes the requirement that all revenue generated from increasing the sales and use tax rate from 6% to 7% goes into the state's general fund for general purposes.
• Allocates 4.6030% of the increased sales tax revenue to certain municipalities in Tennessee as provided by law.
• Requires the remaining 95.3970% of the increased sales tax revenue to be put into the state’s general fund for general purposes.

Who It Names or Affects

• The commissioner of revenue who will manage the distribution of these funds.
• Certain municipalities in Tennessee that receive a portion of the increased sales tax revenue.
• State government which receives most of the increased sales tax revenue.

Terms To Know

Sales Tax

A tax charged on the sale or use of goods and services.

General Fund

The main account where a government keeps money for general expenses.

Limits and Unknowns

• It is unclear which specific municipalities will receive the allocated funds.
• The bill does not specify how much revenue will be generated from this tax increase.

Official Summary Text

Present law requires th
e commissioner
of revenue to
deposit
promptly
in state depositories all moneys received by the commissioner, and all such moneys
must
be earmarked and allocated
according to law. Present law provides s
everal special allocations of moneys so collected. One such special allocation requires the commissioner to
pa
y
into the state general fund and allocat
e
exclusively for general state purposes

all revenue generated from the sales and use tax
rate increasin
g
from 6
to
7%
,
and from the tax levied at the rate of 2.75% on
any
single article of personal property
between $
1,600
and
$3,200.
This bill removes from these provisions the requirement for the commissioner to deposit the
revenue generated from the sales
and use tax rate increase from 6 to 7%
into the general fund for general purposes.

This bill creates a special allocation that requires,
of the revenue generated from the sales and use tax
rate increase
from 6
to
7%
, 4.6030%
to
be apportioned to several
incorporated municipalities within this state to be allocated and distributed to them as
presently required by the commissioner
.
The rest of the revenue,
95.3970%
, must
be paid into the state general fund and allocated exclusively for general state purpo
ses.

Current Bill Text

HOUSE BILL 909
By Garrett

SENATE BILL 177
By Briggs

SB0177
000950
- 1 -

AN ACT to amend Tennessee Code Annotated, Section
67-6-103, relative to distribution of revenues.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-6-103, is amended by deleting
subdivision (c)(1) and substituting instead:
(1) Notwithstanding another law to the contrary, 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) on the sale or use of any single article of personal property
pursuant to chapter 856, § 4 of the Public Acts of 2002 shall be paid into the state
general fund and allocated exclusively for general state purposes.
SECTION 2. Tennessee Code Annotated, Section 67-6-103(c), is amended by adding
the following as a new subdivision:
(3) Notwithstanding another law to the contrary, of the revenue generated 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, four and six thousand thirty ten-
thousandths percent (4.6030%) shall be apportioned to several incorporated
municipalities within this state to be allocated and distributed to them as provided in
subdivision (a)(3)(A). Ninety-five and three thousand nine hundred seventy ten-
thousandths percent (95.3970%) shall be paid into the state general fund and allocated
exclusively for general state purposes.

- 2 - 000950

SECTION 3. Tennessee Code Annotated, Section 67-6-103, is amended by deleting the
final sentence of subdivisions (d)(1)(A)(vi), (d)(1)(D), (d)(1)(E)(iv), (g)(2)(A), (h)(3), (i)(3), (k)(2),
(l)(2), (m)(2), (n)(4), (o)(2), and (s)(2) and substituting instead:
The revenue must be allocated as provided in chapter 529 of the Public Acts of 1992,
chapter 856 of the Public Acts of 2002, and subdivision (c)(3), respectively.
SECTION 4. Tennessee Code Annotated, Section 67-6-103, is amended by deleting the
language ", 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%) contained in chapter 856, § 4 of the Public Acts
of 2002," in subsections (p) and (t); and is further amended by deleting the final sentence of
subsections (p) and (t) and substituting instead the following:
The revenue must be allocated as provided in chapter 529 of the Public Acts of 1992,
chapter 856 of the Public Acts of 2002, and subdivision (c)(3), respectively.
SECTION 5. This act takes effect July 1, 2025, the public welfare requiring it.