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SB 2629

Motor Vehicles, Titling and Registration - As introduced, exempts from the sales and use tax the sale of a motor vehicle to an active-duty military service member who is a resident of this state and stationed out-of-state. - Amends TCA Section 67-6-303.

114th Regular Session (2025-2026) Introduced by Todd Gardenhire

Exempts Tennessee-resident active-duty military buying a motor vehicle in Tennessee from state and local sales and use taxes when stationed out-of-state.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
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Bill Summary · SB 2629

Summary of SB 2629 / HB 1801 (Tennessee, 114th Legislature)

Bill at a Glance

  • Title: Motor Vehicles, Titling and Registration – Exempts from sales and use tax the sale of a motor vehicle to an active-duty U.S. military service member who is a Tennessee resident but stationed out-of-state.
  • Jurisdiction: Tennessee
  • Proposed Change: Adds a new subdivision to Tenn. Code Ann. § 67-6-303(a) recognizing an exemption from sales and use tax for qualifying military personnel.
  • Effective Date: July 1, 2026
  • Sponsors: Senator Todd Gardenhire ( Senate) and Representative Vital (House)

What the Bill Does

  • Main Purpose: Provide a sales and use tax exemption on motor vehicle purchases when the buyer is:
    • An active-duty member of the United States uniformed services,
    • A resident of Tennessee,
    • Stationed out-of-state on military orders.
  • Legal Change: Adds a new subdivision to the existing statute clarifying that such qualifying service members are exempt from Tennessee sales and use tax on motor vehicle purchases.

Key Provisions and Changes

  • Scope of Exemption: Applies to motor vehicle purchases in Tennessee where the buyer is an active-duty service member, Tennessee resident, and stationed out-of-state under military orders.
  • Statutory Reference: Amends TCA § 67-6-303(a) to add the new exemption criteria.
  • Timing: Effective July 1, 2026.

Who Is Affected

  • Beneficiaries:
    • Tennessee resident active-duty military personnel.
    • Officers and enlisted personnel who are stationed out-of-state on military orders.
  • Indirectly Affected Parties:
    • Dealers and sellers of motor vehicles in Tennessee (due to tax collection changes for eligible buyers).
    • Local governments that rely on state and local sales taxes (potential reductions in revenue from the exemption).
  • Quantified Fiscal Impact (from the Fiscal Note):
    • State General Fund Revenue: Net decrease of approximately $146,465 in FY 2026-27 and subsequent years.
    • Local Government Revenue: Net decrease of approximately $61,422 in FY 2026-27 and subsequent years.
    • The fiscal note outlines reductions due to the tax exemption and provides methodology and assumptions used (e.g., estimated number of eligible service members, vehicle purchase mix, and average vehicle prices).

Administrative and Fiscal Details

  • Assumptions Highlighted in Fiscal Note:
    • About 1,325,253 active-duty personnel worldwide; 1.5% estimated Tennessee residents; 7.5% of those stationed out-of-state on orders.
    • Of qualifying Tennessee residents stationed out-of-state, an estimated 5.0% purchase a vehicle, with 85% of those purchases being used cars.
    • Estimated average vehicle prices: new cars roughly $49,191; used cars roughly $25,533 (based on Kelley Blue Book, Jan 2026 data).
    • Example calculation results in a total annual vehicle purchase value to be exempted in the range of approximately $2.18 million (for FY26-27 and onward in the analysis).
  • Tax Mechanics:
    • The exemption affects both state sales tax and local option sales tax collections, with given effective local and single-article tax considerations in the fiscal analysis.
  • Implementation: The bill directs that the exemption apply to purchases made in Tennessee; it does not specify remote or out-of-state purchase scenarios beyond the exemption’s described context.

Procedural Timeline and Status

  • Introduced/Subject to Committee: As of the latest action, the bill has progressed through Senate and House committees and is placed on committee calendars for consideration in April 2026.
  • Key Action Milestones (historical):
    • February 2, 2026: Introduced, passed on First Consideration.
    • February 25, 2026: Passed in a committee (Senate Transportation and Safety) and referred to Senate Finance, Ways, and Means.
    • April 2026: Scheduled for consideration in Senate Finance, Ways, and Means.

Practical Impact and Considerations

  • For Eligible Members: Reduced cost to purchase a motor vehicle, recognizing service members who are Tennessee residents stationed out-of-state.
  • Budget Impact: Net decrease in state and local sales tax revenue requires consideration by state/local budgeting processes.
  • Administrative Considerations: Tax authorities and dealerships will need to verify residency status, active-duty military status, and out-of-state orders to apply the exemption correctly.

If you’d like, I can provide a brief comparison to existing exemptions in Tennessee law or a plain-language FAQ for eligible service members and dealership staff.

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

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