2023 Legislative Summaries
Fortified Wine Production
Public Chapter 131 authorizes wineries, farm wineries, and manufacturers of alcoholic beverages to distill, blend, and fortify wine with their own products. This public chapter allows manufacturers to purchase the distilled, blended, or fortified wine from wineries and farm wine producers in a tax-free transaction. Likewise, this public chapter allows wineries and farm wine producers to purchase distilled, blended, and fortified wine from manufacturers in a tax-free transaction.
Effective Date: April 4, 2023
Wine and Beer Definitions
Public Chapter 236 modifies the definition of “wine” to include alcohol fermented using "dried" grapes and "fruit and other agriculture products." This public chapter also modifies the definition of beer to include beverages made from alcohol fermentation of sugar or fruit ingredients used to make cider.
Effective Date: April 25, 2023
Tennessee Works Tax Act
Public Chapter 377 makes various changes to the business tax, franchise and excise tax, and sales and use tax.
This public chapter makes the following changes to business tax:
- Increases the business tax filing threshold to $100,000 per jurisdiction,
- Increases the gross sales threshold for contractors who perform contracts in Tennessee to $100,000,
- Provides that businesses with more than $3,000 but less than $100,000 in annual gross receipts within a jurisdiction must obtain a minimal activity business license from their county and/or municipal clerk’s office,
- Provides that businesses with annual gross receipts of $100,000 or more must obtain a standard business license from their county and/or municipal clerk’s office for each location within the jurisdiction,
- Reduces the business tax rate on Classification 5A taxpayers from 0.3% to 0.1%, and
- Expands the business tax manufacturing exemption to include out-of-state manufacturers, as well as sales made from storage or warehouse facilities located within a ten-mile radius of the manufacturing location.
Effective Date: These provisions have varying effective dates. For more information, please see the Department’s important notices here.
Brownfield Remediation Costs Credit
Public Chapter 86 creates a franchise and excise tax credit equal to the remediation costs for a brownfield property for a qualified development project in a tier 3 or tier 4 enhancement county. The maximum credit allowed is $500,000 and can be used to offset up to 100% of the combined franchise and excise tax liability. Any unused credit may be carried forward for 25 years. This credit is in addition to the brownfield property credit based on purchase price.
Effective Date: July 1, 2023
Tennessee Works Tax Act
Public Chapter 377 makes various changes to the franchise and excise tax, business tax, and sales & use tax.
This public chapter makes the following changes to franchise and excise tax:
- Excludes $500,000 of real and tangible property from the franchise tax minimum measure,
- Establishes a $50,000 standard deduction from net earnings when calculating excise tax,
- Conforms with the federal bonus depreciation provisions of the Tax Cuts & Jobs Act of 2017,
- Creates a two-year paid family medical leave credit based on the federal paid family and medical leave credit under Internal Revenue Code §45S,
- Extends the carryforward periods for several franchise and excise tax credits to 25 years, and
- Adopts single sales factor apportionment, which will be passed in over a three-year period.
Effective Date: These provisions have varying effective dates. For more information, please see the Department’s important notices here.
Safe Deposit Box Notification for Inheritance Tax
Public Chapter 28 specifies that the death of the sole or last surviving lessee of a safe deposit box does not need to be reported to the department of revenue if the lessee died after December 31, 2015.
Effective Date: March 10, 2023
State Litigation Tax
Public Chapter 370 clarifies that adoption proceedings in chancery, circuit, or juvenile court are not subject to the state litigation tax.
Effective Date: July 1, 2023
Coal Severance Assessments
Public Chapter 401 postpones the effective date of the additional coal severance assessments created in 2018 under the Primacy and Reclamation Act of Tennessee.
Effective Date: May 11, 2023
Industrial Machinery Exemption
Public Chapter 53 clarifies that machinery, equipment, and materials purchased by a contractor to be used in completing a contract for a wastewater treatment project with the department of general services for the Megasite Authority of West Tennessee is included in the definition of "industrial machinery" for purposes of the industrial machinery sales and use tax exemption.
Effective Date: July 1, 2023
Tennessee Works Tax Act
Public Chapter 377 makes various changes to the franchise and excise tax, business tax, and sales & use tax.
This public chapter creates a three-month grocery sales tax holiday from August 1, 2023 through October 31, 2023, and adopts streamlined sales tax provisions that establishes destination sourcing for interstate sales of services performed on tangible personal property, leases of tangible personal property, and the purchases and distribution of direct mail.
Learn more in the Department’s important notices here.
Effective Date(s): May 11, 2023, for sales tax holiday provisions; July 1, 2024, for streamlined sales tax provisions.
New Tax on Sales of Hemp-Derived Cannabinoids
Public Chapter 423 establishes a new 6% sales tax for the privilege of engaging in the business of selling products containing a hemp-derived cannabinoid. This tax applies in addition to the standard 7% state sales tax rate and the applicable local option sales tax rate.
This public chapter also requires the Department of Revenue to conduct inspections at the retail locations where such products are sold and confiscate non-compliant hemp-derived cannabinoid products that are available for sale.
Learn more in the Department’s important notice here.
Effective Date: July 1, 2023, for tax provisions; July 1, 2024, for enforcement efforts.
Sales Tax Exemption for Trailers Removed from Tennessee Within 3 Days of Purchase
Public Chapter 449 extends the existing sales tax exemption for motor vehicles, trailers, and boats sold for removal from Tennessee within three calendar days of purchase to include certain types of trailers used for non-commercial purposes.
Learn more in the Department’s tax manual here.
Effective Date: July 1, 2023
Aviation Fuel Tax Cap
Public Chapter 455 lowers the aviation fuel tax cap on aviation fuel used in the operation of a commercial aircraft by a certified or licensed air carrier with a transportation hub in Tennessee. Through June 30, 2023, the cap is $5 million; for the tax year July 1, 2023 through June 30, 2024, the cap is $3 million; and for tax years occurring on or after July 1, 2024, the cap is $1 million.
Learn more in the Department’s important notice here.
Effective Date: May 17, 2023
Repossession Sales Tax Credit
Public Chapter 467 expands the eligibility of the sales and use tax repossession credit by making this credit available to a dealer who principally sells used automobiles, collects a down payment averaging not more than 5% of the automobile sales price, assigns 100% of its security instruments to an affiliated finance company, advances from its own funds the sales tax amount on each purchase, and reimburses the finance company for the sales tax the company is unable to collect from the purchaser.
This public chapter also requires the taxpayer to receive confirmation from the Department that it meets the above criteria before utilizing the credit.
Effective Date: July 1, 2023
Sunset of Sales Tax Exemption for Admissions to Certain Events
Public Chapter 480 provides that the existing sales tax exemption for admission charges to events by certain entities that promote, product, and control the entire production does not apply to sales made on or after January 1, 2027, to amusement or recreational activities conducted, produced, or provided at a facility owned by a sports authority during a period in which the facility is eligible to receive a special allocation of states sales tax.
Effective Date: July 1, 2023
Exemption for Firearm Safes and Firearm Safety Devices
HB7012/SB7085 (2023) creates a permanent sales and use tax exemption for firearm safes and firearm safety devices.
Learn more in the department’s important notice here.
Effective Date: November 1, 2023
Disabled Person License Plates and Honorary Consul License Plates
Public Chapter 52 eliminates the disabled person license plate fee for a parent or guardian of an individual who is permanently and totally confined to a wheelchair and who does not own or operate a vehicle. This public chapter also discontinues the honorary consular cultural plate.
Effective Date: January 1, 2024
Certification of Disability by Physical Therapists
Public Chapter 89 authorizes licensed physical therapists to issue certified statements of disability in the same manner as physicians for a person's application for a disabled person license plate, decal, or placard.
Effective Date: March 31, 2023
36-Month Fleet Rental Vehicle Registration
Public Chapter 110 authorizes the Department to issue motor vehicle registrations that are valid for 36 months to businesses that register at least 15,000 vehicles annually and are engaged in the rental of motor vehicles, trucks, and trailers for periods of 31 days or less.
Effective Date: July 1, 2023
Emergency Personnel License Plates
Public Chapter 117 authorizes the Department to issue the emergency license plate to emergency communication dispatchers.
Effective Date: July 1, 2023
Transportation Modernization Act
Public Chapter 159 increases the registration fee for all-electric vehicles and creates a registration fee for hybrid and plug-in hybrid vehicles. These fees only apply when a vehicle registration is renewed.
The registration fee for all-electric vehicles is as follows:
- For registration renewals on or after January 1, 2024, and prior to January 1, 2027: $200.
- For registration renewals on or after January 1, 2027, and prior to January 1, 2028: $274.
- For registration renewals on or after January 1, 2028, and thereafter: $274, adjusted annually for inflation.
The registration fee for hybrid electric vehicles and plug-in hybrid electric vehicles is as follows:
- For registration renewals on or after January 1, 2024, and prior to January 1, 2028: $100.
- For registration renewals on or after January 1, 2028, and thereafter: $100, adjusted annually for inflation.
These registration renewal fees apply in addition to standard registration fees.
Additionally, this public chapter authorizes the Department of Transportation to develop a user fee facility project and provides that a vehicle owner who unlawfully drives through a user fee facility three or more times may be subject to suspension or non-renewal of the vehicle's registration.
Learn more in the Department’s important notice here.
Effective Date: April 17, 2023
Unclaimed and Abandoned Vehicles
Public Chapter 229 authorizes garagekeepers to notify owners and lienholders of unclaimed or abandoned vehicles by overnight delivery using a nationally recognized carrier with proof of delivery. This public chapter also authorizes garagekeepers and towing companies to tow abandoned, immobile, or unattended vehicles at the request of private property owners.
Effective Date: April 25, 2023
County Clerk Vehicle Registration Mail Order Fees
Public Chapter 234 allows county clerks to increase their fees for the service of handling mail orders of license plates and decals in an amount not to exceed an applicable United States postal service price increase in any given year.
Effective Date: April 25, 2023
New License Plates
Public Chapter 250 designates various new specialty license plates including:
- Fighting for the Bullys
- First State Flag
- The Volunteer State
- Wilson County The Place to Be
- Historic Jonesborough
- A Soldier’s Child
- Honoring the Fallen
- Kappa Delta Sorority
- Promote Peace
- 100 Black Men
- America at Its Best
- Golfer
- Nashville SC
- Bristol Motor Speedway
- University of North Carolina
- Robotics in Education
- Elizabethton Cyclones
- Remote Area Medical
- Lupus Foundation
- Crusade Against Darkness
- Wilder Reign
- Sickle Cell Foundation
- Stronger Than My Father
- Special Olympics
- Tennessee Councils of the Boy Scouts of America
- Child Development Services of Murfreesboro
- Look Twice Save a Life
This public chapter designates new cultural plates including:
- Retired Firefighter
This public chapter designates new military plates including:
- Coast Guard Medal
- Coast Guard Commendation Medal
This public chapter designates new collegiate plates including:
- University of Tennessee Southern
This public chapter redesigns the United States Military plates to include an engraved or embossed emblem of the branch of service of the recipient.
This public chapter redesigns the standard and “In God We Trust” passenger vehicle license plates by removing the words “www.tnvacation.com”. For the “In God We Trust” plate option, the words “In God We Trust” will be placed where “www.tnvacation.com” currently appears. This public chapter also states customers can only request one of the new, redesigned plates if they are changing plate classes (currently have a standard plate and want to switch to “In God We Trust” or vice versa) or if their current plate has been lost, stolen, destroyed, or illegible. The public chapter authorizes the Department to begin issuing these redesigned plates for new vehicle registrations beginning January 1, 2024, or upon the depletion of the existing inventory.
This public chapter removes the requirement for the application for the Ducks Unlimited license plate to be accompanied by proof the applicant is a member of Ducks Unlimited.
This public chapter authorizes the King University collegiate plate to be reissued if the minimum order of 100 plates is met prior to reissuance.
In addition, this public chapter extends until July 1, 2024, the timeframe for meeting the issuance requirement of 1,000 plates for the following license plates:
- River Life
- Bays Mountain
- Historic Maury
- Honoring Law Enforcement
- Niswonger Children’s Hospital
- Respiratory Therapists
- I RECYCLE
Effective Date: July 1, 2023
School Bus Registration
Public Chapter 462 provides that the registration fee for one school bus owned by a person contracted with a local education agency (LEA) to provide school transportation is equal to the registration fee for a school bus owned by the LEA. The registration fee for any additional school buses owned by a person under contract with an LEA is subject to the commercial vehicle registration fee, which is based on the number of seats in the vehicle.
Effective Date: July 1, 2023