2026 Legislative Summaries
Alcoholic Beverage Manufacture Definition
Public Chapter 833 adds the bottling of distilled spirits to the definition of "manufacture" for purposes of alcoholic beverage manufacturing licensing and regulation.
Effective Date: April 27, 2026
Family-Owned Non-Corporate Entity (FONCE) Exemption
Public Chapter 616 expands the definition of “family-owned” for purposes of the FONCE exemption to mean that at least 95% of the voting rights, capital interest, or profits of the entity are owned by natural persons who have a relationship of first cousin or closer, by trusts established for the benefit of such relatives, or by the estate of a deceased individual who was such a relative while living.
Effective Date: July 1, 2026
Community Investment Tax Credit Modification
Public Chapter 1009 revises the calculation of the community investment tax credit for financial institutions making qualified loans to a community development financial institution certified by the United States Department of the Treasury to be based on the month-end average unpaid principal balance of the loan, rather than a percentage of the unpaid balance of the loan as of December 31.
Effective Date: January 1, 2027
Additional Tax on Liquid Inhalable Cartridge Products
Public Chapter 1127 imposes an additional tax on hemp-derived cannabinoid products in liquid inhalable cartridge form at the rate of 10% of the wholesale cost.
Learn more in the Department’s important notice here.
Effective Date: July 1, 2026
Occupancy Tax Relief for Local State of Emergencies
Public Chapter 979 authorizes a county that has declared a state of local emergency or is subject to a state of emergency or disaster declaration to pass a resolution or executive order providing occupancy tax relief to county residents displaced from their homes due to the state of emergency. The public chapter requires the county to establish the processfor granting tax relief and limits the relief period to 14 days or less.
Learn more in the Department’s important notice here.
Effective Date: May 19, 2026
Hydrogen Gas Tax and Liquified Gas Tax
Public Chapter 653 changes the hydrogen gas gallon equivalent factor from 5.66 lbs. per gallon to 2.2 lbs. per gallon and clarifies that hydrogen gas dealers are subject to the same fuel permitting and tax filing requirements as other motor fuel dealers. The public chapter also clarifies the liquified gas tax is due upon the delivery of the liquified gas into the fuel supply tank of a motor vehicle.
Effective Date: April 1, 2026
Quarterly Litigation Tax Report for Court Clerks
Public Chapter 743 requires court clerks, upon request of the state treasurer, to submit a quarterly report to the State Treasurer and the Department of Revenue on the amount oflitigation and privilege taxes collected, remitted, suspended, released, and waived for the previous quarter.
Effective Date: July 1, 2026
Sales Tax Calculation for Rounded Cash Transactions
Public Chapter 602 authorizes retailers to round cash transactions to the nearest nickel due to lack of exact change and requires businesses to calculate and remit sales tax based on the sales price prior to any rounding adjustments.
Learn more in the Department’s notice here.
Effective Date: March 18, 2026
Courthouse Square Revitalization Zone Allocation Extension
Public Chapter 926 continues allocation of state sales tax revenue to municipalities underthe Courthouse Square Revitalization Pilot Project Act of 2005 until June 30, 2038.
Effective Date: May 7, 2026
Sales Tax Allocation for Intercollegiate Football Stadium
Public Chapter 927 creates a sales and use tax allocation for a stadium located in a county with a population between 366,200 and 366,300 that is designed to host games of anintercollegiate football team that competes in the NCAA Division I Football Championship Subdivision, games of international and high school soccer teams, and local and regional events. The allocation consists of state and local sales tax revenue derived from the sales of admissions, food, drinks, merchandise, parking, and servicesoccurring on the premises of the stadium and related ancillary facilities. The allocation begins January 1, 2027, or after the Department receives a copy of a revenue sharing agreement between the entity and the municipality, whichever is later.
Effective Date: May 7, 2026
Metro County Government Local Option Sales Tax Rate on Food and Food Ingredients
Public Chapter 1014 authorizes a county with a metropolitan form of government to reduce or eliminate its local option sales and use tax rate on the retail sale of food and food ingredients by resolution.
If a county with a metropolitan form of government chooses to modify its rate, themodification applies only to tax periods beginning on or after October 1, 2026.
Effective Date: May 19, 2026
Sales Tax Allocation for Repurposed Minor League Baseball Stadium
Public Chapter 1034 establishes a sales and use tax allocation for a former baseball stadium that hosted a minor league baseball team playing Class AA or higher and is repurposed into a performance venue with a seating capacity of 2,500 or more. The allocation consists of state and local sales tax revenue derived from the sales of admissions, food, drinks, merchandise, parking, and services occurring on the premises of the performance venue and related ancillary areas.
Effective Date: May 21, 2026
State Sales Tax on Certain Money Transmission Services
Public Chapter 1035 imposes sales tax on the service of transmitting money from a location originating in Tennessee to a location outside of the United States or its territories by an entity licensed under the Money Transmission Act. The tax rate is $10 per transaction and, for transactions exceeding $500, an additional 2% tax applies on the amount of money transmitted in excess of $500. The service is not subject to local option sales tax.
Learn more in the Department’s important notice here.
Effective Date: January 1, 2027
Commercial Development District Deadline Extension
Public Chapter 1038 extends the deadline by which a county that borders at least three distressed rural counties must apply for the commercial development district designation, which allows the county to retain the sales and use tax generated within the district, from December 31, 2026, to December 31, 2040.
Effective Date: May 21, 2026
Metro Government TDZ and Convention Center Allocations
Public Chapter 1079 clarifies that the sales and use tax allocation for a tourism development zone located within a county with a metropolitan form of government will continue until 2043. The public chapter extends the sales and use tax allocation for hotelsconstructed in connection with the convention center authority until 2058 or until all debt is retired, whichever is earlier. The public chapter also repeals certain local taxes, including the local occupancy nightly fee on the first day of the month after the debt for the convention center facility is paid in full.
Effective Date: July 1, 2026
Hybrid Electric Vehicle Definition
Public Chapter 628 amends the definition of "hybrid electric vehicle," for purposes of the additional registration fee imposed on hybrid electric vehicles, to mean a vehicle propelled by a combination of an electric motor and an internal combustion engine or other power source.
Effective Date: March 26, 2026
Precious Cargo Act
Public Chapter 648 clarifies that stuttering and other types of communication disorders are qualifying medical conditions for purposes of the 2021 Precious Cargo Act, which allows the owner or lessee of a motor vehicle, or the parent, legal guardian, or conservator of a person with certain medical conditions, to request a designation of such condition on their motor vehicle registration.
Effective Date: July 1, 2026
Enforcement of Garagekeeper’s Lien for Stored Unclaimed Motor Vehicles
Public Chapter 661 authorizes the enforcement of a garagekeeper's lien on a motor vehicle that was stored for the purpose of repairs if the garagekeeper makes a good faith attempt to acquire the vehicle owner’s consent to repair the vehicle and the garagekeeper sends a notice, via three-day delivery, to the last known registered owner of its intent to store the vehicle.
Effective Date: July 1, 2026
New License Plates
Public Chapter 822 designates various new specialty license plates including:
- Coalmont OHV Park
- Flatrock Motorsports Park
- Blackman Blaze
- International Bluegrass Music Association
- Sky City Entrepreneur Center
- Local Journalism Matters
- Knoxville Ice Bears
- Quail Forever
- Adopt a Golden
- Domestic Violence and Sexual Assault Awareness and Prevention
- Back the Blue
- Cowboy Up
- Christian Brothers High School
- Nashville Bourbon Auction
- The Bridge House
- LaunchTN
- Childhood Cancer Awareness
- Global War on Terrorism Expeditionary or Service
- Sons of the American Revolution
- Blacksmithing
- Ohio State University
- Appalachia Service Project
- POD256
- American Foundation for Suicide Prevention
- Foodies of TN
- Tennessee Aviation
The public chapter designates the following new military license plates:
- Airman’s Medal
- Navy and Marine Corps Medal
- Soldier’s Medal
- Meritorious Service Medal
The public chapter expands the use of the Friends of Sycamore Shoals Historic Area, Inc. license plate proceeds to include support of historical projects and certain charitable nonprofit organizations within Carter County.
The public chapter requires a redesign of the Delta Sigma Theta license plate on or beforeJanuary 1, 2027, and changes the allocation of the Delta Sigma Theta plate to the Delta Research and Educational Foundation for the purpose of providing academic scholarships at schools in this state or to students from this state.
In addition, the public chapter extends until July 1, 2027, the timeframe for meeting the issuance requirement of 1,000 plates for the following license plates:
- Man2Man Prostate Cancer Group
- Respiratory Care
- YMCA
- The Elephant Sanctuary
- Friends of Warner Parks
- STAR Riding Therapy
- Singing for Change
- Tennessee Environment & Restoration
- Nashville Humane Association
- Nashville Sounds
- Historic Jonesborough
- Golfer
- Niswonger Children's Hospital
- Tennessee Ronald McDonald House Charities
- Slow Down Move Over
- Northeast State Community College
- End Overdose
- Rolling Thunder
- Order of the Eastern Star
- Support Our Veterans
- • ALS Research
Effective Date: July 1, 2026
Temporary Disabled Placards for High-Risk Pregnant Women
Public Chapter 827 authorizes temporary disabled placards to be issued to pregnant women certified to be high-risk by a physician.
Effective Date: January 1, 2027
U.S. Space Force Vehicle Registration Reciprocity Agreement
Public Chapter 892 authorizes a U.S. Space Force member who is stationed in Tennesseewith a vehicle properly registered in the member’s state of domicile to maintain theirvehicle registration in their state of domicile rather than register it in Tennessee.
Effective Date: May 5, 2026
Proof of Lawful Residence Required for Vehicle Registrations
Public Chapter 954 requires a vehicle owner or lessee to submit proof of U.S. citizenship or proof of lawful presence at the time of initial motor vehicle registration.
Learn more in the Department’s important notice here.
Effective Date: January 1, 2027
Military Member All-Electric Vehicle Registration Fee Exemption
Public Chapter 969 exempts active-duty military service members stationed outside of Tennessee, and not on a military reservation located partially within Tennessee, from paying the additional registration fee imposed on all-electric vehicles.
Effective Date: July 1, 2026
Updates to Vehicle Financial Responsibility Requirements
Public Chapter 1077 requires, from July 1, 2027, until June 30, 2029, a vehicle owner or lessee to submit proof of financial responsibility at the time of initial motor vehicle registration.
The public chapter also increases the coverage failure fees imposed on motor vehicle owners who fail to comply with certain financial responsibility requirements beginning July 1, 2027. The initial coverage failure fee increases from $25 to $500, and the continued coverage failure fee increases from $100 to $1,000. The public chapter creates a new coverage failure fee of $1,500 for vehicle owners who lack proof of financial responsibility on the same motor vehicle more than once within three years of an initial notice of noncompliance. This fee will be accompanied by a suspension or revocation of the vehicle registration.
Learn more in the Department’s important notice here.
Learn more about the Department’s insurance verification program here.
Effective Date: July 1, 2027
Vapor Products Containing Nicotine Analogues
Public Chapter 1126 expands the definition of “vapor product” to include products that contain liquid nicotine analogues, such that those products are required to be on the vapor product directory and are subject to the wholesale tax on vapor products.
Learn more in the Department’s important notice here.
Effective Date: May 22, 2026