AN ACT to amend Tennessee Code Annotated, Title 4; Title 54; Title 55; Title 65 and Title 67, relative to transportation.
HB1683 directs the Tennessee Department of Transportation to study long-range transportation infrastructure needs, costs, and funding sources for the years 2028, 2050, and 2075. The study must examine current transportation revenue sources, possible existing revenues that are not currently dedicated to transportation but are tied to transportation activity, and the effect of the bill’s tax-revenue changes on future infrastructure needs. TDOT must submit its findings and recommendations to the relevant House and Senate transportation committee chairs by January 1, 2028.
The bill also changes how certain sales tax revenues are allocated beginning October 1, 2026. It redirects 95.3970% of sales and use tax revenue from the sale, use, consumption, distribution, or storage of new or used motor vehicles and tires to the highway fund, while 4.6030% is distributed to municipalities on a population basis. In addition, revenue from the 2.75% tax on the portion of vehicle and tire sales between $1,600 and $3,200 is also deposited into the highway fund. The bill preserves existing special allocations for the education-related sales tax increase enacted in 1992 and the 6% to 7% sales tax increase enacted in 2002.
The bill’s impact is to increase and clarify the share of certain motor-vehicle- and tire-related tax receipts that support state highway funding, while maintaining a smaller municipal share and protecting other earmarked revenue streams. It would affect the highway fund, municipal distributions, and the administration of sales and use tax revenues under Tennessee Code Annotated § 67-6-103, with downstream implications for transportation financing and local government revenue sharing.
The available voting history suggests broad support in the House Transportation Subcommittee and House Transportation Committee, with unanimous votes in both stages. No committee transcript is available, but the recorded votes indicate the bill was received favorably and advanced without recorded opposition at those points. Overall sentiment appears positive, especially among transportation-focused legislators who likely view the measure as a planning and funding step for future infrastructure needs.
Notable points of contention, based on the bill text, would likely center on the reallocation of tax revenue away from general or other uses and toward the highway fund, as well as the reduced municipal share of motor vehicle and tire tax receipts. The bill also raises longer-term policy questions about whether current transportation revenue sources will be sufficient for projected needs in 2028, 2050, and 2075, and whether additional non-dedicated revenues should be redirected to transportation.
HB1683 amends Tennessee’s sales tax allocation rules in Title 67 and adds a new transportation planning requirement in Title 54. It increases the portion of certain motor vehicle and tire sales tax revenues deposited into the highway fund, preserves specified existing earmarks for education-related sales tax revenue, and requires TDOT to study and report on long-range transportation infrastructure funding needs and sources. The bill would directly affect the highway fund, municipal distributions, and the state’s transportation finance framework.
The bill appears to have strong support in committee, with unanimous favorable votes in both the House Transportation Subcommittee and the House Transportation Committee. Although no transcript is available, the vote history suggests the measure was viewed as a practical transportation funding and planning bill rather than a controversial policy change. The overall sentiment is therefore positive, especially among members focused on infrastructure and long-term funding.
The main areas of potential contention are fiscal rather than procedural: the bill redirects a large share of tax revenue from motor vehicle and tire transactions to the highway fund, which may be seen as reducing flexibility for other state or local uses. Municipalities may also be concerned about the relatively small share they receive under the new allocation formula. More broadly, the required TDOT study implicitly acknowledges uncertainty about future transportation funding needs, which could lead to debate over whether the state should rely on reallocated existing revenues or pursue new funding sources.