HB 160 – SB 1072
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 12, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 160 – SB 1072
SUMMARY OF BILL: Exempts from the 15 percent liquor-by-the-drink (LBD) tax the
retail sale of wine, including tastings and sealed bottles, for consumption on the premises of a
winery, farm wine producer, or a satellite facility of a winery or farm wine producer.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years NET ($368,600)
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 & Subsequent Years NET ($384,400)
Assumptions:
• Tennessee Code Annotated § 57-4-301(c)(1) levies a 15 percent LBD gross receipts tax on
alcoholic beverages sold for consumption on the premises.
• The proposed legislation exempts the sale of wine for consumption on the premises of
wineries, farm wine producers, and satellite facilities from such tax.
• The sale of wine for consumption on the premises is still subject to state and local sales tax
under the proposed legislation.
• Based on information provided by the Department of Revenue (DOR), total LBD
collections from entities subject to the proposed legislation were $1,338,000 in FY23-24.
• Fiscal Review Committee staff’s current estimates for total LBD tax collection growth rates
are 4.06 percent in FY24-25 and 5.15 percent in FY25-26.
• Total LBD tax collections are estimated to be $1,464,027 ($1,338,000 x 1.0406 x 1.0515) in
FY25-26. For the purpose of this analysis, this number is assumed to stay constant into
perpetuity.
• Based on a 2024 tasting room survey, an average of 54 percent of winery sales, or $790,575
($1,464,027 x 54%), come from the tasting room.
• Pursuant to Tenn. Code Ann. § 57-4-306(a), 50 percent of the revenue generated from the
LBD tax shall be distributed to the General Fund, earmarked for education, and the
remaining 50 percent to local governments.
• The recurring decrease in state revenue is estimated to be $395,288 ($790,575 x 50%).
HB 160 – SB 1072 2
• The recurring decrease in local revenue is estimated to be $395,288 ($790,575 x 50%).
• Fifty percent of tax savings, or $395,288 [($395,288 + $395,288) x 50%], will be spent in the
economy on sales-taxable goods and services.
• The current state sales tax rate is 7.0 percent; the average local option sales tax rate is
estimated to be 2.5 percent; the effective rate of apportionment to local government
pursuant to the state-shared allocation is estimated to be 3.617 percent.
• The recurring increase in state sales tax revenue as a result of 50 percent of tax savings
being spent in the economy on sales-taxable goods and services is estimated to be $26,669
[($395,288 x 7.0%) – ($395,288 x 7.0% x 3.617%)], beginning in FY25-26.
• The recurring increase in local sales tax revenue as a result of 50 percent of tax savings
being spent in the economy on sales-taxable goods and services is estimated to be $10,883
[($395,288 x 2.5%) + ($395,288 x 7.0% x 3.617%)], beginning in FY25-26.
• The net decrease in state revenue as a result of the proposed legislation is estimated to be
$368,619 ($395,288 - $26,669) in FY25-26 and subsequent years.
• The mandatory net decrease in local revenue as a result of the proposed legislation is
estimated to be $384,405 ($395,288 - $10,883) in FY25-26 and subsequent years.
• DOR can meet the provisions of the proposed legislation utilizing existing resources;
therefore, any impact to DOR is estimated to be not significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director