Nashville, Tenn. – The state budget continues to be the main focus for lawmakers during the remaining days before adjournment. The Finance Committee approved two major tax relief bills this week, sending them to the Senate floor for final consideration. One would allow more senior citizens to qualify for Hall income tax relief, while the other would reduce the state sales tax on food from 5.25% to 5.0%. Senate Bill 198 and Senate Bill 199, sponsored by Senate Majority Leader Mark Norris (R-Collierville), are part of Governor Bill Haslam’s budget package to provide tax relief to Tennesseans and have been a legislative priority of many Republican lawmakers for the past decade.
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.
This legislation builds on Hall tax relief efforts taken in 2011 that 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 food tax reduction legislation also builds on 2012 legislative action to reduce the state portion of the sales tax on grocery food from 5.5% to 5.25 %.
The 2013-14 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.