WeVote
Log In

Bill

Bill

SB 1642

Highways, Roads and Bridges - As introduced, requires 95.3970 percent, instead of 100 percent, of sales and use tax revenue generated from the sale of new or used tires to be deposited in the highway fund; adds 95.3970 percent of sales and use tax revenue generated from the sale of new or used motor vehicles to be deposited in the highway fund; requires the remaining 4.6030 percent of such revenue to be allocated to the several incorporated municipalities; allocates single article sales tax collections on the retail sale of new or used motor vehicles to the highway fund. - Amends TCA Title 4; Title 54; Title 55; Title 65 and Title 67.

114th Regular Session (2025-2026) Introduced by Page Walley

Redirect 95.3970% of motor vehicle and tire tax revenue to the Highway Fund and 4.6030% to municipalities, plus TDOT long-range funding study.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
#highways #roadsandbridges
0
WeVote Research Nonpartisan
Bill Summary · SB 1642

Summary: SB 1642 (HB 1683) — Transportation funding and study requirements (Tennessee, 114th General Assembly)

Date introduced: 2026; Effective date if enacted: October 1, 2026

Purpose and intent

  • Reallocate certain sales and use tax revenues from motor vehicles and tires to the highway fund and local governments, while requiring TDOT to study long-range transportation infrastructure needs and funding sources.
  • In essence, move a larger share of motor vehicle and tire tax revenue into the Highway Fund and reduce General Fund reliance, with a mandatory local allocation, and commission a long-range planning study.

Key provisions

Section 2: Allocation of sales and use tax revenue (motor vehicles and tires)

  • Replaces the current allocation under Tennessee Code Annotated § 67-6-103(v) to:
    • Deposit 95.3970% of revenues from the sale, use, consumption, distribution, or storage for use or consumption of new or used motor vehicles and new or used tires (on or after Oct. 1, 2026) into the Highway Fund.
    • Allocate 4.6030% of those revenues to the several incorporated municipalities within the state, distributed monthly by population (latest federal census and other authorized censuses).
    • Applies to single-article sales tax collections on the retail sale of new or used motor vehicles; the proposal also creates a mechanism for municipalities incorporated after the last decennial census to begin receiving allocations beginning July 1 after incorporation, subject to population determinations.
  • Section includes provisions that certain existing higher-rate revenues (educational earmarks and pre-2002 adjustments) are not altered by this subsection; those funds remain allocated as previously provided by law.

Section 1: TDOT study on future transportation funding needs

  • TDOT must study transportation infrastructure needs, costs, and funding sources for the years 2028, 2050, and 2075.
  • The study must consider:
    • Existing transportation-dedicated revenue (including the Highway Fund).
    • Potential sources of revenue not currently dedicated to transportation but derived substantially from transportation activities.
    • The impact of the revenue allocation changes (Section 2) on infrastructure needs.
  • TDOT must report findings and recommendations to the chairs of the Senate Transportation and Safety committee and the House transportation committee by January 1, 2028.

Section 3: Effective date

  • Effective October 1, 2026.

Affected entities and impacts

  • State government:

    • General Fund: Decrease in state revenue due to shifting 95.3970% of motor vehicle and tire tax revenue into the Highway Fund.
    • Highway Fund: Increase in state revenue from the higher allocation percentage (and from the single-article sales tax allocation).
    • Local governments: Mandatory revenue increase via a 4.6030% share of motor vehicle and tire tax revenue, distributed to municipalities based on population.

  • Local governments:

    • Municipalities receive a recurring, population-based allocation of revenue from motor vehicle and tire sales and use taxes starting Oct. 1, 2026, with distributions monthly.

  • Transportation planning:

    • TDOT is required to perform a long-range planning study (2028, 2050, 2075) and report findings to legislative committees, informing future funding strategies.

Fiscal notes (high-level)

  • The Fiscal Review Committee estimates demonstrate:
    • Net increase in state revenue to the Highway Fund beginning in FY26-27 and continuing thereafter, with a corresponding decrease to the General Fund.
    • A parallel, mandatory increase in local revenue allocations starting in FY26-27.
  • The analysis provides a rough quantitative projection of the shift in revenues and the first-year effective period being 75% of a full year due to the October 1, 2026 effective date.

Procedural timeline

  • Effective date: October 1, 2026.
  • First year impact: 75% of full-year impact (due to mid-fiscal-year start).
  • TDOT study due: January 1, 2028 to the relevant legislative committees.
  • Legislative history indicates committee referrals in early 2026, with action ongoing in 2026.

Summary takeaway

SB 1642/HB 1683 would largely divert 95.3970% of the sales and use tax revenue generated from the sale of new or used motor vehicles and tires to the state Highway Fund, while allocating 4.6030% to municipalities. It also imposes a requirement for TDOT to conduct a long-range infrastructure funding study (2028, 2050, 2075) and report back to lawmakers. Additionally, it would allocate single-article sales tax collections on motor vehicles to the Highway Fund, creating a clearer stream of funding for transportation at the expense of General Fund revenue and with a predictable local revenue component.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.