Tennessee bill would allow local governments to cut, end grocery tax

Published 4:17 pm Tuesday, February 20, 2024

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By Jon Styf

The Center Square

Tennessee Gov. Bill Lee did not include a grocery tax holiday in this year’s budget proposal, but a proposed bill would begin allowing counties and municipalities to cut or remove grocery tax.

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Senate Bill 2520 was set to be heard Tuesday in the Senate Finance, Ways and Means Revenue Subcommittee but was instead delayed two weeks to March 5.

The bill estimates local government will collect a combined $499 million in grocery tax next fiscal year at rates up to 2.75%. A fiscal note on the bill says it is unclear how many local governments would lower or remove those taxes if given that option. Currently, the average local sales tax rate is 2.5% while the state grocery sales tax is 4%.

Companion House Bill 2641 is scheduled to be heard in the House Finance, Ways and Means Revenue Subcommittee on Wednesday. House Majority Leader William Lamberth, R-Portland, is the sponsor.

A pair of state Democrats have proposed to end grocery taxes across the state in House Bill 2043 and Senate Bill 1934, which have been referred to committee but have not been placed on a calendar.