Legislators eliminate sales tax on agricultural expenses

Published 1:21 pm Wednesday, May 4, 2022

NASHVILLE — The Tennessee Senate concluded its business on Thursday, April 28, highlighted by over $280 million in tax cuts and financial relief to Tennesseans.

State Senator Rusty Crowe (R-Johnson City), Chairman of the Senate Health and Welfare Committee, State Senator John Stevens (R-Huntington), Chairman of the Senate Appropriations Subcommittee, Representative Rebecca Alexander (R-Jonesborough), and Representative Tim Hicks (R-Gray) have sponsored legislation to exempt farmers from paying sales tax on items and services used for agricultural production.

Senator Crowe said that “Our state seal showcases Agriculture for a good reason. It is the staple of our economy. After meeting with our farmers, and discussing the problems that they are having, I know that our farms and farm families are struggling to make ends meet and the cost of producing products is quickly outpacing the ability to make a profit at the marketplace. I have found, that lowering taxes results in more incentive and production — which further results in increased revenue in our state.

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“I was proud to sponsor this legislation with Senator Stevens who worked tirelessly to pass this through our Finance committees. I am also very proud of all that our farmers do to put food on our tables for our Tennessee families.”

Senator Stevens said that “Agriculture is the backbone of Tennessee’s economy, and I am glad we can provide assistance to hardworking farmers who are dedicated to putting food on the tables of families across the region,” said Stevens. “By eliminating this sales tax, we can help small family farms stay in the family for generations by lowering costs and making it easier to turn a profit. I am very pleased to have had the honor to sponsor the legislation that made this possible.”

Rep. Alexander said “I was honored to be a part of the 112th General Assembly which passed some very crucial legislation this year. One of the most important pieces was HB 1405 by the Chairman of Agriculture, Curtis Halford. I was honored to co-sponsor this bill that will give a much-needed tax relief to farmers across this state. Any help we can give the farmers should be a high priority.

“Farmers are doing everything they can to keep their farms thriving. However, when their production costs exceed their profit, they can no longer stay in business. As a state, we cannot afford to let this happen. HB 1405 allows farmers to purchase items used in their production to be tax-free. As a member of the General Assembly, we are committed to looking at additional ways to support the production of agriculture in Tennessee.”

Rep. Hicks said “The tax cut for farmers is one of the biggest items that we as legislators have done for farmers in years. It’s really good timing — especially for the struggles farmers are having with price increases with fuel cost and the supply issues because of the Biden administration’s lack of common sense. I am honored to sponsor this legislation; it will affect farmers for generations to come. I thank the Senate and House leadership for making this a priority this year.”

The legislation, which was approved by both the Senate and House of Representatives, eliminates the sales tax on items such as building materials, repair services, labor and other expenses used in agriculture production. The tax reduction totals $2.8 million, and mirrors tax reductions that manufacturers in Tennessee currently receive.

The legislation will take effect January 1, 2023. It does not apply to tax items including automobiles, household appliances, or fuel used in vehicles that travel on public highways in the state.

Other tax cuts and financial relief that were passed this year include:
– $80 million for a grocery sales tax holiday for August 2022 to provide relief for rising inflation and cost of food.
– $121.6 million to eliminate the state’s $29 license plate registration fee for one year — a financial relief that benefits only Tennesseans and not out-of-state residents who shop and do business in the state.
– $9 million to remove the annual $400 professional privilege tax on physicians to continue a multi-year commitment to eliminate the professional privilege tax. In 2019, lawmakers passed legislation eliminating the professional privilege tax for 15 licensed professions.
– $68 million to reduce sales tax on broadband supplies and incentivize companies to accelerate the deployment of needed broadband services to rural communities.
– $360,000 to eliminate a tax on gold bullion and silver.