By Logan Langlois
NASHVILLE, TN — Tennesseans rejoice at the news of a 3-month tax holiday for grocery goods purchased in stores beginning on August 1st and ending after October 31st. Meaning, that for three months residents of the volunteer state will be able to purchase their groceries tax-free in what Governor Bill Lee calls the “largest tax cut in state history.” The holiday comes following the passing of the Tennessee Works Tax Act by state lawmakers, which calls for over $400 million in tax cuts, $272 million of which is to provide for the upcoming three-month grocery tax holiday.
Items that will be applicable for the holiday include food and food ingredients, which are technically defined as liquid, concentrated, solid, frozen, dried, or dehydrated substances that are sold to be ingested or chewed by humans and are consumed for their taste or nutritional value. The 3-month tax-free holiday will not include sales of already prepared food, dietary supplements, candy, alcoholic beverages, or tobacco products even if they are made available in local grocery stores. The Tennessee Department of Revenue also specifies that the holiday does not include all packaged food purchases in general; it does not for example include food, and food ingredients purchased from a micro-market or vending machine remain subject to sales tax.
To many residents who have been especially feeling the 11 percent price of food increase last year, the largest in 40 years, this news couldn’t come soon enough. During a release in which he spoke on the passage of the Tennessee Works Tax Act, Gov. Bill Lee gave his thanks to the state General Assembly for passing the tax cuts. While giving his thanks, Gov. Lee remarked that the intention of the bill’s passage was “to make the right investments for Tennessee families and businesses while supporting our state’s future economic growth and success.”
Some, however, question the governor’s publicly outright charitable reasons for advocating for the bill, commenting that the tax-free holiday far from makes up for the comparatively grossly disproportionate amount of tax breaks made available to incoming corporations in comparison to the average citizen. One such person who wasn’t afraid to voice their discontent with Gov. Lee was a Press Secretary and spokesperson for the Tennessee Senate Democratic Caucus, Brandon Puttbrese.
“While corporations are getting permanent tax breaks, working and middle-class families are only getting temporary tax relief on groceries,” Puttbrese told reporters.
The tax holiday is applicable to state taxes whenever they make a grocery purchase, though some families may still have to pay local taxes. Tennessee is only one of the 12 states that are still implementing a sales tax on groceries, the current rate applied sitting at 4 percent. With this current sales tax rate, the holiday is projected to save Tennessean families an average of $100 over the next three months.
The Tennessee Works Tax Act is also projected to provide about $150 million in tax cuts for small businesses, allowing approximately 140,000 businesses in the state to no longer need to file business taxes provided their gross receipts don’t exceed the $100,000 required to justify filing. It’s something that comes as no small relief to many small business owners, who are used to the previous justification for filing only being a mere $10,000. Small businesses can also look forward to the first $50,000 in net earnings being exempt from Tennessee excise tax, something which according to Lee’s office will result in over 23,000 businesses having a $0 excise tax liability.
