Tennessee Legislature to consider ending grocery tax in 2025 session

NASHVILLE, Tenn. (WDEF)- Could the Tennessee state sales tax on groceries be going away?

That’s what a new bill is looking to do.

In the state of Tennessee, all purchases of grocery items have a four percent sales tax.

This is in addition to any local taxes that are levied.

However, a proposal to get rid of the grocery sales tax raises other questions.

Senator Bo Watson said, “When you make a tax reduction, you also have to consider making spending reductions.”

Earlier this month, Republican Representative Elanie Davis of Knox County proposed House Bill 21 to eliminate the state sales grocery tax.

It has received support from several prominent Republican lawmakers, including House Majority Leader William Lamberth.

However, this is not the only tax relief bill that will be considered by the state legislature.

Also on the table are tax reductions for properties owned by veterans and the professional privilege tax.

Sen. Watson said, “Those all are competing tax reduction bills and the food taxes is in that group, and the legislature will have to determine: One, can we afford it? And two, which of those tax reductions would have the greatest benefit?”

According to the most recent data from the U-S Census Bureau, Tennesseans on average pay nearly $1200 dollars a month in groceries.

This means on average, residents could expect to save nearly $50 on average per month.

On the flip side, the state would forgo a significant amount of tax revenue.

However, recent grocery tax holidays according to Senator Watson have shown this could spur other economic activity.

Sen. Watson said, “It kept more money in people’s pockets, and when you’re a sales tax based state, which we are, the more money you keep in your citizen’s pockets they spend, and the more money they spend, obviously that generates more tax revenues.”

He says that this will be a lengthy discussion.

Sen. Watson said, “Whether we do all of it, some of it, or none of it will be determined during that lengthy discussion.”

The Tennessee Legislature begins their session on January 14th.