Tennessee tax relief is coming soon for families and businesses in the state. The Tennessee Works Tact Act totals more than $400 million in tax cuts for businesses and families. But while the legislation is touted as the largest tax cut in the state’s history, questions are swirling about who will benefit the most.
In a release regarding the legislation, Tennessee Gov. Bill Lee thanked the General Assembly for passing the tax cuts “to make the right investments for Tennessee families and businesses while supporting our state’s future economic growth and success.”
Brandon Puttbrese, a spokesperson for the Tennessee Senate Democratic Caucus had a different opinion on the Tennessee Works Tax Act. “While corporations are getting permanent tax breaks, working and middle-class families are only getting temporary tax relief on groceries,” Puttbrese told reporters.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What is the Tennessee Works Tax Act?
Gov. Lee is calling the Tennessee Works Tax Act the” largest tax cut in state history.”
- The legislation provides temporary sales tax relief to families and significant tax relief for Tennessee businesses (and some out-of-state businesses).
- Although the sales tax relief in the new law for families is temporary, it will cost the state $273 million.
Sales Tax Holidays in Tennessee
Due to the new law, Tennessee shoppers will receive a three-month grocery tax holiday starting next month. (Tennessee is one of the twelve states that still tax groceries. The current sales tax rate on groceries is 4%, and families may also need to pay local sales taxes.)
From August 1 through October 31, groceries will be exempt from state and local taxes. According to information provided on Gov. Lee’s website, the $273 million allocated in the bill for the sales tax holiday will save each Tennessee family around $100 on average over the three months.
Tax Relief for Small Businesses in Tennessee
The Tennessee Works Tax Act also provides approximately $150 million in tax cuts for small businesses. As a result of the legislation, approximately 140,000 businesses in the state will no longer need to file business taxes. That's because only businesses with gross receipts totaling $100,000 or more per tax jurisdiction will need to file. (The previous threshold for filing was only $10,000.) And that’s not the only tax cut on the horizon for Tennessee businesses.
- The first $50,000 in net earnings will be exempt from Tennessee excise tax.
- The $50,000 tax exemption for small businesses is expected to result in more than 23,000 businesses having a $0 excise tax liability, according to a news release from the governor’s office.
- The first $500,000 of business property will be exempt from Tennessee’s franchise tax.
Who Gets the Most Tennessee Tax Relief?
- The Tennessee Works Tax Act provides small businesses with permanent tax savings, while families will experience three months of tax relief during the Tennessee grocery sales tax holiday.
- And despite the temporary suspension of grocery tax costing the state $273 million, each family is projected to save about $100.
- Meanwhile, many businesses are projected to save thousands of dollars each year as a result of the Tennessee Works Tax Act.
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
