Tennessee House Bill HB1530

Tennessee 2025-2026 Regular Session

• Introduced: 1/13/26
• Refer: 1/15/26

Caption

AN ACT to amend Tennessee Code Annotated, Title 57, Chapter 3 and Title 67, Chapter 6, relative to the sales tax on food and food ingredients.

Summary

HB1530 would eliminate Tennessee’s state sales tax on the retail sale of food and food ingredients, while preserving a separate tax treatment for food sold under the state’s part 7 provisions. The bill amends multiple sections of the Tennessee Code to remove references tying food sales to the general sales tax rate and to update related definitions and licensing provisions. It also makes conforming changes to alcohol-related licensing statutes that use food-sales percentages to determine eligibility or compliance. The bill further revises revenue-distribution rules so that counties and municipalities continue to receive an amount substantially equal to what they would have received from the exempted food sales, based on exempt-sales reporting and other data the commissioner deems relevant. It also removes a prior statutory provision that guaranteed a portion of the food tax rate would continue to support the state general fund and K-12 education even if the rate were reduced below 6 percent. The act would take effect July 1, 2026.

Impact

HB1530 would significantly change Tennessee’s sales tax code by exempting food and food ingredients from the general retail sales tax, while requiring conforming updates across related tax and licensing statutes. It would affect state revenue allocation, local government distributions, and certain liquor-by-the-drink or alcohol licensing standards that depend on the share of sales from food. The bill also preserves a mechanism intended to hold counties and municipalities harmless for the loss of food-tax revenue, though the exact distribution method would rely on administrative data and rulemaking by the commissioner.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, support, or opposition in the available materials. Based on the bill’s structure, the measure appears to be a tax-relief proposal aimed at reducing the cost of groceries and food purchases for consumers. At the same time, the bill’s revenue-offset language suggests an effort to address concerns from local governments about lost sales-tax collections.

Contention

The main points of contention likely involve state and local revenue losses, the adequacy of the hold-harmless distribution for counties and municipalities, and the administrative complexity of tracking exempt food sales. Another likely issue is the bill’s effect on education funding, since it deletes language that previously protected a dedicated share of the food-tax rate for K-12 purposes. Businesses affected by food-sales thresholds for alcohol licensing may also have an interest in how the revised definitions are applied.