Taxes, Exemption and Credits

Plain English Breakdown

There is no information provided about penalties for misuse or fraud regarding the exemption certificate.

Food Tax Exemption for Low-Income Families

This bill creates an exemption from sales and use tax on food and food ingredients for low-income families with qualifying dependents.

What This Bill Does

• Exempts the retail sale of food and food ingredients from Tennessee's sales and use tax if sold to a member of an eligible family.
• Defines 'eligible family' as one that meets income requirements (up to 300% of free or reduced-price lunch eligibility) and has qualifying dependents for federal tax purposes.
• Requires eligible families to apply for the exemption with proof of eligibility, such as a recent federal income tax return.
• Issues an exemption certificate and wallet-sized card to approved applicants.
• Requires retailers to accept the exemption card or copy of the certificate and record the exemption account number.

Who It Names or Affects

• Low-income families meeting specific criteria
• Retailers selling food and food ingredients

Terms To Know

Eligible family

A family with an annual household income not exceeding 300% of the free or reduced-price lunch eligibility threshold, and a qualifying dependent for federal tax purposes.

Exemption certificate

A document issued by the Tennessee Department of Revenue to eligible families confirming their exemption from sales and use tax on food and food ingredients.

Limits and Unknowns

• The bill does not specify how retailers will be reimbursed for lost tax revenue.
• It is unclear if there are any penalties for misuse or fraud regarding the exemption certificate.
• The exact number of families that will qualify for this exemption and its overall impact on state revenues remains unknown.

Official Summary Text

This bill authorizes an exemption on the sales and use tax on
the retail sale of food and food ingredients if
such items are
sold to a member of an eligible family.
As used in such provision, an
"
e
ligible family" means a family
that meets both of the following criteria:



An annual household income that does not exceed 300% of the amount required for a student to qualify for free or reduced price lunch, as provided in the income eligibility guidelines published by the United States department of agriculture's food and nutrition service
.



A qualifying child or qualifying relative, as those terms are defined in
federal law,
claimed as a dependent for federal income tax purposes.

This bill requires an
eligible family that is seeking the exemption
described above to
submit an application for exemption to the commissioner of revenue, providing proof of eligibility that may be evidenced by submitting with the application a copy of the most recent federal income tax return as reported on form 1040. The application must
be submitted on forms prescribed by the commissioner.

If the exemption is approved by the commissioner, then
this bill requires
the department of revenue
to
issue a sales and use tax exemption certificate and wallet-sized card

to the applicant that declares that the applicant is entitled to the exemption
. An
eligible family that has obtained an exemption certificate and card
must
present the card to a retailer or provide the retailer with a copy of the certificate of exemption
that
include
s
the exemption account number. The retailer
must
record the exemptio
n account number and maintain a copy of such exemption in the retailer's records to document that the purchaser was entitled to the exemption.

Current Bill Text

HOUSE BILL 1767
By Clemmons

SENATE BILL 1829
By Yarbro
SB1829
011172
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 67,
Chapter 6, relative to food and food ingredients.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 67, Chapter 6, Part 3, is amended by
adding the following as a new section:
67-6-359.
(a) There is exempt from the tax imposed by this chapter the retail sale of food
and food ingredients, as defined in § 67-6-102, if sold to a member of an eligible family.
(b)
(1) An eligible family that is seeking the exemption provided under this
section must submit an application for exemption to the commissioner of
revenue, providing proof of eligibility that may be evidenced by submitting with
the application a copy of the most recent federal income tax return as reported
on form 1040. The application must be submitted on forms prescribed by the
commissioner.
(2) If the exemption is approved by the commissioner, then the
department of revenue shall issue a sales and use tax exemption certificate and
wallet-sized card, which may be made of paper, to the applicant that declares
that the applicant is entitled to the exemption provided by this section.
(3) An eligible family that has obtained an exemption certificate and card
issued by the department shall present the card to a retailer or provide the
retailer with a copy of the certificate of exemption, which must include the
exemption account number included on the certificate issued by the

- 2 - 011172

commissioner. The retailer shall record the exemption account number and
maintain a copy of such exemption in the retailer's records to document that the
purchaser was entitled to the exemption.
(c) For purposes of this section:
(1) "Eligible family" means a family with:
(A) An annual household income that does not exceed three
hundred percent (300%) of the amount required for a student to qualify for
free or reduced price lunch, as provided in the income eligibility guidelines
published by the United States department of agriculture's food and
nutrition service; and
(B) A qualifying child or qualifying relative, as those terms are
defined in § 152 of the Internal Revenue Code (26 U.S.C. § 152), claimed
as a dependent for federal income tax purposes.
SECTION 2. For purposes of promulgating rules and forms, 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.