HB 767 - SB 907
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 26, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 767 - SB 907
SUMMARY OF BILL: Exempts from the business tax the sale of prescription drugs or
medicine with a cost for a 30-day supply that exceeds the Medicare Part D specialty cost threshold
for 2025 plan years, as determined by the Centers for Medicare and Medicaid Services (CMS), and
any services necessary for proper preparation, storage, handling, administration, patient education,
or post-sale monitoring of such drugs or medicine.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years ($2,872,400)
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 & Subsequent Years ($3,371,900)
Assumptions:
• Pursuant to Tenn. Code Ann. § 67-4-708(2)(D), each person engaged in the business of
making sales of prescription drugs and patent medicines is subject to the business tax.
• The proposed legislation exempts from the business tax the sale of prescription drugs with
a cost for a 30-day supply that exceeds the Medicare Part D specialty cost threshold of $950
for 2025 plan years.
• Based on data published by CMS, it is estimated that nationwide spending on such products
will be approximately $195,440,000,000 in FY25-26.
• Based on information published by the United States Census Bureau, Tennessee accounts
for 2.13 percent of the United States population.
• Therefore, it is estimated approximately $4,162,872,000 ($195,440,000,000 x 2.13%) in sales
of prescription drugs will be made in Tennessee in FY25-26.
• Pursuant to Tenn. Code Ann. § 67-4-709(2), the tax rate applicable to a person engaged in
the business of making sales of prescription drugs and patent medicines is set at 0.15
percent of all sales by a retailer.
• The total collections from the business tax on such sales is estimated to be $6,244,308
($4,162,872,000 x 0.15%).
HB 767 - SB 907 2
• Based on information provided by DOR, 46 percent of business tax collections was
allocated to the General Fund and approximately 54 percent was allocated to local
governments in FY23-24.
• The recurring decrease in state revenue is estimated to be $2,872,382 ($6,244,308 x 46%) in
FY25-26 and subsequent years.
• The recurring mandatory decrease in local revenue is estimated to be $3,371,926
($6,244,308 x 54%) 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