Tennessee Senate Bill SB0907

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, Part 7, relative to taxation.

Summary

SB0907 amends Tennessee’s sales and use tax provisions to create a new exemption for certain high-cost prescription drugs and related services. The bill adds a definition-based exemption for prescription drugs or medicines whose 30-day equivalent supply cost exceeds the Medicare Part D specialty tier cost threshold for 2025 plan years, as determined by the federal Centers for Medicare and Medicaid Services. It also exempts receipts from services tied to those exempt drugs, including preparation, storage, handling, administration, patient education, and post-sale monitoring. The bill revises existing statutory language in Title 67, Chapter 4, Part 7 so that prescription drugs and patent medicines remain generally addressed under the tax code, but high-cost specialty-tier drugs are carved out from taxation. The measure is set to take effect on July 1, 2025, and would affect state tax collections, pharmacies, drug manufacturers, healthcare providers, and consumers purchasing qualifying specialty medications.

Impact

SB0907 would narrow the application of Tennessee’s sales tax to prescription drugs and patent medicines by exempting a subset of high-cost medications and closely related pharmacy/clinical services. It amends Tennessee Code Annotated §§ 67-4-708 and 67-4-712, changing the tax treatment of qualifying drugs and associated service receipts under the state’s taxation statutes. The practical effect would be reduced tax liability on certain specialty medications and related dispensing or monitoring services, with corresponding revenue implications for the state.

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 text alone, the measure appears policy-focused and targeted, with a clear consumer-healthcare tax relief rationale for expensive prescription drugs. The absence of recorded opposition or amendments in the provided context prevents a more specific assessment of legislative sentiment.

Contention

The main potential point of contention is the scope of the exemption: it applies only to drugs exceeding a federal Medicare Part D specialty tier cost threshold, which may raise questions about fairness, administrative complexity, and whether the threshold is an appropriate proxy for tax relief. Another possible issue is the fiscal impact on state revenue, since exempting high-cost drugs and related services would reduce taxable receipts. Stakeholders likely to have differing views include patients and healthcare advocates favoring lower costs, versus fiscal policymakers concerned about narrowing the tax base.