Tennesseans will see new tax cuts as fiscally conservative budget goes into effect
Published 4:08 pm Thursday, June 23, 2022
NASHVILLE — Tennessee’s new $52.8 billion budget for the 2022/2023 fiscal year is among a host of new laws that will go into effect on July 1. This budget continues lawmakers’ record of low taxes and fiscal responsibility. The no-debt, balanced budget appropriates over $280 million in new tax cuts and financial relief for Tennesseans.
On July 1, Tennesseans will not have to pay the state’s annual license plate registration fee of $23.75 for one year, saving citizens a total of $121.6 million. This savings, which will continue through June 30, 2023, is one way lawmakers could provide financial relief exclusively to Tennesseans and not out-of-state residents who shop and do business in the state.
“Tennessee is in a strong financial position,” said Chairman of the Senate Finance, Ways and Means Committee Bo Watson (R-Hixson), who sponsored the legislation to remove the state’s license plate registration fee. “Our Rainy Day Fund is at record highs and we were able to pay for all expenditures in this year’s budget with cash. Removing the state license plate renewal fee is one way we can give back to Tennesseans and thank them for their work to make Tennessee the greatest state in the Union.”
The budget allocates money for a month-long grocery sales tax holiday for August 2022. This sales tax holiday aims to help provide relief for rising inflation rates. For the entire month of August, the 4% state sales tax plus applicable local taxes for unprepared food and food ingredients will be removed. The state will replace local revenue lost, so local governments’ budgets will not be affected by this tax reduction. See the Sales and Use Tax Notice for more information on this sales tax holiday.
“I was glad to work with Governor Lee and my colleagues in the General Assembly to reduce the financial burden on families at the grocery store,” said Senate Majority Leader Jack Johnson (R-Franklin), who sponsored the state budget. “Due to failed policies of the Biden Administration, Tennesseans’ grocery bills are higher than ever before. While we cannot solve national economic issues created at the federal level, this is one way we can provide relief to Tennessee families.”
“On a state level, Tennessee’s record of fiscal responsibility has allowed us to cut taxes every year while state revenues continue to go up, which is remarkable,” continued Johnson. “Our commitment to being a low-tax state has been a driver in economic growth. I am proud of Tennessee’s forward-looking financial management that protects Tennessee taxpayers and strengthens our economy.”
Since 2011, Tennessee Republican lawmakers have cut over $2 billion in taxes for Tennesseans. At the same time, Tennessee has earned top awards for fiscal stability by U.S. News and World Report and maintained a AAA bond rating.
The General Assembly continued Tennessee’s annual back-to-school sales tax holiday on clothing, school supplies and computers, which will take place July 29, 2022 – July 31, 2022. More information about tax-exempt items during this holiday can be found here.
The sales tax holiday on gun safes and safety devises that was first passed in 2021 will also be extended under this year’s budget. It provides funds for sales tax-free gun safes and safety devises from July 1, 2022 to June 30, 2023. More information on this sales tax holiday can be found here.
Other key investments in the 2022/2023 budget include an additional $1 billion in K-12 funding, bringing the total investment in K-12 education to $6.5 billion. It also provides $25 million for important legislation protecting victims of violent crimes and providing true accountability for those who commit crimes.
To maintain responsible fiscal management, the budget invests $250 million in the state’s Rainy Day Fund, which serves as Tennessee’s savings account to withstand economic downturns, raising the fund to a historic level of $1.8 billion. Another key component of this year’s budget is that $1.3 billion of Tennessee’s $3 billion revenue surplus is set aside for future use. Much of the surplus is used for one-time expenditures to prevent the growth of state government but still provide resources and relief to important initiatives.
A list of other key bills that will go into effect on July 1, 2022 can be found https://www.tngopsenate.com/new-tennessee-laws-to-take-effect-july-1-2022/.