NASHVILLE, Tenn. – More senior citizens would qualify for Hall income tax relief under legislation approved by the Senate Finance Committee’s Tax Subcommittee this week. Senate Bill 198 is part of Governor Bill Haslam’s legislative package to provide tax relief to Tennesseans. The package also includes Senate Bill 199 to reduce the state sales tax on food from 5.25% to 5.0% which is pending consideration in the Tax Subcommittee later this month.
The Hall tax is imposed on income derived from interest on bonds, notes and stock dividends. Since enactment of the Hall tax in 1929, the use of investment savings has grown as a primary source of retirement income. The legislation approved this week raises the Hall income tax exemption level for citizens age 65 and older from $26,200 to $33,000 for single filers and from $37,000 to $59,000 for joint filers.
The action by the Subcommittee builds on Hall tax relief efforts taken in 2011 which raised the exemption level for senior citizens from $16,200 to $26,200 for single filers and from $27,000 to $37,000 for joint filers.
The state budget legislation provides a total of $23.1 million, which will go back to taxpayers through a combination of tax relief proposals. In addition to the Hall tax and food tax relief bills, the budget provides funds to raise the inheritance tax exemption level from $1.25 million to $2 million as authorized by Public Chapter 1057, passed by the General Assembly last year. Finally, the budget proposal provides tax relief for low income seniors, veterans and the disabled by fully funding the growth of the property tax freeze program enacted in 2007.