AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 5, relative to property taxes.
HB2607 revises Tennessee’s property tax law to impose a statewide cap on annual growth in ad valorem tax receipts for counties, municipalities, metropolitan governments, and other taxing entities. Under the bill, a taxing authority generally may not levy property taxes that produce more than 102% of the prior year’s receipts, with exclusions for new construction, property newly added to the tax rolls, previously exempt property, and debt service on general obligation bonds issued before July 1, 2026.
The bill also creates a process for exceeding that cap. A taxing entity must determine the need for additional revenue, adopt a resolution or ordinance stating its intent, and then obtain voter approval in a referendum. The referendum must specify the purpose, amount, and duration of the increase, may last no more than four consecutive years, and must be approved by 60% of voters at a regular November election. The bill further requires local governments seeking to exceed the certified tax rate to provide public notice and comply with the new levy limitation procedures.
HB2607 would significantly change the way local property tax rates are set in Tennessee by tying annual levy growth to a 2% receipts cap unless voters approve a higher increase. It amends provisions in Title 67, Chapter 5, including the certified tax rate process, and expressly preserves the new levy limitation in the referenced code sections. The bill would affect county, municipal, metropolitan, and other local taxing entities, while carving out certain revenue sources and bond-related levies from the cap. It takes effect July 1, 2026, and applies to tax years beginning on or after that date.
Because there are no committee transcripts or recorded votes provided, there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill’s structure, it appears designed to restrain automatic property tax growth and require direct voter approval for larger increases, which typically appeals to taxpayers and fiscal conservatives. At the same time, it would likely be viewed more cautiously by local governments that rely on property tax revenue for operations and debt service.
The main point of contention is the balance between taxpayer protection and local fiscal flexibility. Supporters are likely to favor the 2% cap and referendum requirement as a check on property tax increases, while opponents may argue that the cap could constrain local budgets, especially when inflation, service demands, or infrastructure needs outpace the limit. The referendum threshold of 60% and the requirement that elections occur during regular November elections may also be seen as making it harder for local governments to raise revenue when needed.