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HB 1329

Revenue, Dept. of - As enacted, reduces from 1.125 percent to 0.75 percent the administrative fee percentage the department takes from the proceeds of the business tax, short-term rental unit occupancy tax, local tax surcharge, coal severance tax, and local option sales tax to assist in defraying the expenses of administration and collection, before remitting proceeds to the appropriate county, city, or town. - Amends TCA Title 67, Chapter 4; Title 67, Chapter 6 and Title 67, Chapter 7.

114th Regular Session (2025-2026) Introduced by William Lamberth

Tennessee reduces Department of Revenue's administrative fee on five tax types from 1.125% to 0.75%, redirecting more collected revenue to local governments starting July 2025.

Pub. Ch. 355
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Bill Summary · HB 1329

Legislative bill overview

HB 1329 reduces the administrative fee that Tennessee's Department of Revenue retains from five major tax collections from 1.125% to 0.75%. This applies to business taxes, short-term rental occupancy taxes, local tax surcharges, coal severance taxes, and local option sales taxes. The reduction takes effect July 1, 2025.

Why is this important

This change affects how much money flows to counties, cities, and towns versus the state. Lower administrative fees mean local governments receive slightly more of their collected tax revenue, though the Department of Revenue has less funding to cover collection and administrative costs. The impact scales with revenue—larger jurisdictions will see more dollar increases than smaller ones.

Potential points of contention

  • Department of Revenue funding: Reducing the fee from 1.125% to 0.75% cuts administrative capacity by roughly 33%, potentially affecting collection efficiency, taxpayer services, or audit capabilities without clear replacement funding
  • Uneven local impact: Smaller municipalities and counties with limited tax bases may see minimal dollar gains, while the Department absorbs the same percentage cut statewide
  • Long-term sustainability: No indication the bill addresses whether 0.75% remains adequate for growing compliance and technology needs in tax administration

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

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