Tennessee House Bill HB0969

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/10/25
• Refer: 2/18/25
• Refer: 2/25/25
• Refer: 4/17/25
• Engrossed: 4/21/25
• Enrolled: 4/28/25
• Passed: 5/21/25
• Chaptered: 5/27/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 4; Title 54; Title 55; Title 65 and Title 67, relative to transportation.

Summary

HB0969 amends Tennessee’s tax allocation rules for revenue collected from the sale, use, consumption, or distribution of new and used tires. Beginning July 1, 2025, the bill directs all such revenue to the state highway fund, rather than the existing distribution formula under sales and use tax law. For the 2025-2026 fiscal year, however, the amount redirected to the highway fund is capped at $80 million; any tire-tax revenue above that cap continues to be distributed under current law. The bill also preserves two existing earmarks that are excluded from the new highway-fund allocation. Revenue tied to the sales tax increase dedicated to educational purposes under the 1992 act, and revenue tied to the 1% sales tax increase enacted in 2002, must continue to be allocated as they are now. The act takes effect immediately upon becoming law, reflecting an intent to begin the revised allocation structure without delay.

Impact

The bill changes Tennessee Code Annotated § 67-6-103 by creating a new subsection that redirects tire-related tax receipts to the highway fund, subject to a one-year cap, while leaving certain education-related sales tax revenues untouched. Its practical effect is to increase transportation funding availability, especially for highway maintenance and related infrastructure, while limiting the fiscal shift in the first year and preserving existing constitutional or statutory earmarks for education-related revenue streams.

Sentiment

The bill appears to have been broadly supported and noncontroversial in the legislative process. It advanced unanimously through the House Transportation Subcommittee, House Transportation Committee, House Finance, Ways and Means Subcommittee, and House Finance, Ways and Means Committee, and then passed the House floor and Senate third consideration with no recorded opposition. The vote pattern suggests strong bipartisan agreement around using tire-tax revenue for transportation purposes.

Contention

No significant opposition is reflected in the available record. The only potentially sensitive issue is the reallocation of tax revenue away from the general distribution formula and toward the highway fund, which could affect other state funding priorities. That concern appears to have been addressed in part by the $80 million cap for fiscal year 2025-2026 and by expressly preserving the existing education earmarks, reducing the likelihood of conflict with education funding stakeholders.