It took many hours of committee hearings, negotiations, and floor debates, but Gov. Haslam’s IMPROVE Act passed the Legislature last month.
The bill—“Improving Manufacturing, Public Roads, and Opportunities for a Vibrant Economy Act”—will fund Tennessee’s $10 billion backlog of road projects by raising the gas and diesel taxes, and it offsets this with tax relief in other areas. Here are the various components:
- Over the next three years, the gas tax will go up 6 cents and the diesel tax will go up 10 cents.
- Vehicle registration fees will increase—for most cars, by $5; for commercial automobiles, by $10; for other large vehicles, by $15; and for electric cars, a new $100 fee.
- The franchise and excise tax imposed on certain multi-state Tennessee businesses will decrease.
- Taxes on groceries drops to 4 percent from 5 percent.
- The Hall Income Tax, 6 percent on investment income, will decrease this year and continue to be phased out by 2022.
- Veterans and the elderly will see property tax relief.
- The Tennessee Department of Transportation, counties, and cities will have more revenue to use on 962 projects throughout the 95 counties of the state—$250 million, $70 million, and $35 million, respectively.
- Twelve counties have new authority to use various taxes – including sales & use, wheel, business, hotel occupancy and residential development – for local transit improvement programs, including light rail. Approval of these tax increases must be approved via voter referenda.
NFIB was neutral on the IMPROVE Act, based on our February special survey of members, but our team worked to cap proposed increases of various business taxes in the local option component. The House concurred with the Senate version on April 24, and the bill headed to the governor for his signature.
