groceries

Lee proposes 1-month pause in sales tax on groceries

Gov. Bill Lee delivers his State of the State Address on Jan. 31, 2022. (Erik Schelzig)

Gov. Bill Lee plans to propose a one-month pause in Tennessee’s 4% sales tax on groceries when he unveils his amendments to the annual spending plan for the budget year starting on July 1.

When Republican lawmakers in 2020 proposed a two-month “food tax holiday,” the proposal was estimated to cost the state about $100 million in forgone revenue.

Legislative Democrats have urged Lee to consider a moratorium on the state’s 27.4 tax on each gallon of gasoline amid spiking prices at the pump. Senate Republicans earlier this year floated a one-year break on the state’s $35 license plate fees. The Revenue Department collected $359 million worth of tag registrations in 2021.

Here’s the full release from the governor’s office:+

NASHVILLE, Tenn. – Today, Tennessee Governor Bill Lee announced his proposal for a 30-day suspension of state and local grocery sales tax to provide direct financial relief to Tennesseans amid surging inflation nationwide.

“As Americans see their cost-of-living skyrocket amid historic inflation, suspending the grocery tax is the most effective way to provide direct relief to every Tennessean,” said Gov. Lee. “Our state has the ability to put dollars back in the pockets of hardworking Tennesseans, and I thank members of the General Assembly for their continued partnership in maintaining our fiscally conservative approach.” 

The Governor’s proposal to suspend state and local sales tax on groceries for 30 days will be included in the Fiscal Year 2022-2023 budget amendment, which will be delivered on Tuesday, March 29.

Lee will host a roundtable with business leaders in Covington today, Thursday, March 24, to discuss the tax cut proposal and hear about the local impacts of nationwide economic challenges.