(The Center Square) – Removing the 4% state sales tax on bread, milk and eggs is in a proposal from Tennessee House Speaker Cameron Sexton.
The bill, cosponsored by House Republicans William Lamberth of Portland and Tim Hicks of Gray, does not include a fiscal note indicating how the bill would affect tax collections, according to the General Assembly's website. If it passes the General Assembly and is signed by the governor, it would take effect on July 1, 2027, according to the bill.
Local sales tax, up to 2.75%, can be added to the state levy. Depending on the county or city, the total tax is 5.5% to 6.75%. Tennessee gets roughly $800 million in revenue from the state tax, according to state finance records.
Sexton told The Center Square in an interview Oct. 27, before the bill was filed, that grocery taxes would be one of the issues lawmakers consider when they convene the 2027 legislative session.
"We'll look at the grocery sales tax, maybe reduce it on some items like food staples and so forth or eliminate it altogether, continue to make our state attractive, continue investing in public education," Sexton said. "I am sure there will be some other side issue that will pop up every now and then. We are waiting to see what Marsha's agenda is and we'll go from there."
The state will have a new governor in Republican Marsha Blackburn. The state Senate will have a new leader. Lt. Gov. Randy McNally, who has presided over the Senate since 2017, did not seek reelection. The Senate Republican caucus will meet on Tuesday to decide who will preside over the body in 2027, according to the caucus.
The Metropolitan Council of Nashville and Davidson County approved a reduction in the grocery tax by one-half percent from its current rate of 2.25% in June. It went into effect on Nov. 1.
The tax cut would return $9.2 million to taxpayers, according to the resolution approved by the council.
State Rep. Sam McKenzie, D-Knoxville, told The Center Square in an interview that he is glad the grocery tax is a priority for Sexton. McKenzie sponsored one of the many bills introduced by both parties to remove the 4% sales tax on generic food. It was sponsored in the Senate by Knoxville Republican Richard Briggs.
The fiscal note for McKenzie's bill estimated that the state revenue loss from removing the tax on generic food alone would be $177.7 million, and the local government revenue loss would be $121.3 million. The bill never made it out of committee.