SB 1095 - HB 1247
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 7, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
SB 1095 - HB 1247
SUMMARY OF BILL: Exempts from the sales tax the first $20 of the sales price on a sale
of tangible personal property paid for with physical cash declared legal tender by state or federal law,
including gold and silver.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years ($2,268,932,600)
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 & Subsequent Years ($955,841,600)
Assumptions:
• Tennessee Code Annotated § 67-6-102(97)(A) defines tangible personal property as
personal property that can be seen, weighed, measured, felt, or touched, or that is in any
other manner perceptible to the senses, including electricity, water, gas, steam, and
prewritten computer software.
• The proposed legislation would not require retailers to accept gold or silver as physical cash;
therefore, any impact due to exempting from sales tax the first $20 of the sales price for
tangible personal property paid for with gold or silver is estimated to be not significant.
• Public Chapter 377 of 2023 exempted food and food ingredients from the sales tax for the
months of August, September, and October 2023.
• Accounting for sales tax that would have been collected in the absence of the three-month
2023 exemption, total sales tax collections would have been $14,266,462,321 in FY23-24.
• Fiscal Review Committee staff’s estimates for total sales tax collection growth rates are 4.81
percent in FY24-25 and 3.25 percent in FY25-26.
• Total sales tax collections are estimated to be $15,438,641,231 ($14,266,462,321 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.
SB 1095 - HB 1247 2
• The current state sales tax rate on the retail sales of food and food ingredients is 4.0
percent; the effective rate of apportionment to local government pursuant to the state-
shared allocation is estimated to be 4.0276 percent.
• According to the Federal Reserve’s 2024 Findings from the Diary of Consumer Payment Choice,
cash accounts for 16 percent of transaction payment methods.
• For the purposes of this analysis, it is estimated that 16 percent of sales tax collections are
generated from cash transactions. It is further estimated that of taxable sales, 50 percent are
derived from transactions totaling $20 or less.
• For the purposes of this analysis, this number is assumed to remain constant into
perpetuity.
• The total estimated impact is as follows:
FY25-26 and Subsequent Years
FY23-24 Collections
7.0% Rate $14,731,551,463
4.0% Rate $707,089,768
16% Cash
7.0% Rate $2,357,048,234
4.0% Rate $113,134,363
Total collections purchases made in cash $2,470,182,597
Total taxable sales $36,500,476,704
50% of sales totaling $20 or less $18,250,238,352
Total Impact*
NET Decrease State Revenue ($2,268,932,580)
NET Decrease Local Revenue Mandatory ($955,841,595)
*Including tax savings being re-spent in the economy
• All calculations used in the completion of this fiscal note are available upon request.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director