HB 594 - SB 659
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 27, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 594 - SB 659
SUMMARY OF BILL: Increases, from two to four, the number of annual temporary sales
periods a bona fide religious institution may make sales that are exempt from the sales and use tax.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years ($52,200)
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 & Subsequent Years ($21,300)
Assumptions:
• Pursuant to Tenn. Code Ann. § 67-6-201, every person is exercising a taxable privilege who
engages in the business of selling tangible personal property or taxable services in this state.
• Pursuant to Tenn. Code Ann. § 67-6-102(8)(B), for the purposes of the imposition of the
sales and use tax:
o Business is any activity engaged in by any person, or caused to be engaged in by
such person, with the object of gain, benefit, or advantage;
o Business does not include occasional and isolated sales or transactions of tangible
goods or services by a person not regularly engaged in business;
o Business does not include any sales or use tax of tangible personal property of any
type sold directly to consumers by any person; provided that the tangible personal
property is not regularly sold by the person or is regularly sold by the person only
during a temporary sales period that occurs on a semiannual, or less frequent, basis,
or, if sold by a volunteer fire department only during a temporary sales period that
occurs no more than four times per calendar year.
• The proposed legislation expands the organizations permitted to make sales-tax exempt
sales during such temporary periods to include bona fide religious institutions.
• According to the Department of Revenue (DOR), such institutions are currently allowed
two temporary sales periods in which they are not required to register to collect sales tax on
their sales.
• Based off information provided by DOR, the estimated total taxable sales exempt under
current law is estimated to be $714,286 in FY23-24.
HB 594 - SB 659 2
• Fiscal Review Committee staff’s current estimates for total sales tax collection growth rates
are 4.81 percent in FY24-25 and 3.25 percent in FY25-26.
• Therefore, total taxable sales subject to the proposed legislation are estimated to be
$772,974 ($714,286 x 1.0481 x 1.0325) in FY25-26. For the purposes of this analysis, this
number is assumed to remain constant into perpetuity.
• The current 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.
• Therefore, the total recurring decrease in state revenue is estimated to be $52,151
[($772,974 x 7.0%) – ($772,974 x 7.0% x 3.617%)] in FY25-26 and subsequent years.
• The total recurring mandatory decrease in local revenue is estimated to be $21,281
[($772,974 x 2.5%) + ($772,974 x 7.0% x 3.617%)] in FY25-26 and subsequent years.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director