AN ACT to amend Tennessee Code Annotated, Title 9; Title 54; Title 55 and Title 67, relative to the allocation of sales tax revenue for the highway fund.
Summary
SB0024 would change how Tennessee allocates state sales tax revenue from the sale, use, storage, or consumption of new and used motor vehicles and new and used tires. Beginning July 1, 2025, the bill directs the state to calculate a “base tax revenues” amount using the prior fiscal year’s collections from those sales, then deposit any revenue above that base into the state highway fund each year. In effect, the measure dedicates future growth in sales tax receipts from vehicle and tire sales to transportation funding rather than leaving all of those receipts in the general allocation structure.
The bill also includes carve-outs to preserve existing earmarks. It states that revenue tied to the historical sales tax increases enacted for educational purposes in 1992 and for the 6% to 7% sales tax increase in 2002 would not be redirected to the highway fund under this new formula, and would continue to be allocated under those prior laws. The act would take effect July 1, 2025.
Impact
SB0024 would amend Tennessee Code Annotated § 67-6-103 to create a new revenue allocation rule for sales tax collections associated with motor vehicles and tires. The practical effect is to dedicate incremental growth in those collections to the highway fund, potentially increasing transportation funding over time without changing the tax rate itself. It would affect state revenue distribution, the highway fund, and the existing statutory framework governing sales tax earmarks, while preserving prior allocations for education-related revenue streams.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill’s structure, the measure appears to be framed as a transportation funding proposal, which typically attracts support from lawmakers prioritizing road and infrastructure investment. At the same time, because it redirects future sales tax growth from vehicle and tire sales, it could raise concerns among those focused on preserving general revenue flexibility or protecting existing funding priorities.
Contention
The main point of contention is likely the redirection of incremental sales tax revenue away from the state’s ordinary allocation structure and into the highway fund. Supporters would likely emphasize improved and predictable transportation funding, while opponents may question whether dedicating this revenue stream is the best use of sales tax growth or whether it could constrain future budget choices. A secondary issue is the bill’s explicit protection of older education-related sales tax earmarks, which suggests an effort to avoid conflict with existing statutory allocations and may reflect sensitivity about not disturbing those prior commitments.
Crossfiled
AN ACT to amend Tennessee Code Annotated, Title 9; Title 54; Title 55 and Title 67, relative to the allocation of sales tax revenue for the highway fund.