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SB 2066

Taxes, Privilege - As introduced, allocates 30 percent of the revenue from taxes on vapor products to counties in equal amounts to be used for youth nicotine prevention programs and services. - Amends TCA Title 67, Chapter 4, Part 10.

114th Regular Session (2025-2026) Introduced by Bo Watson

30% of vapor product tax revenue will be deposited with the state treasurer and allocated equally to counties for youth nicotine prevention programs starting July 1, 2026.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
#privilege #taxes
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Bill Summary · SB 2066

Summary of SB 2066 (Session 114) — Tennessee

Jurisdiction: Tennessee
Bill Type: Senate Bill (with House companion HB 2360)
Topic: Allocation of vapor product tax revenue to local governments for youth nicotine prevention

1. Purpose and intent

  • The bill amends the distribution of revenue from the tax on vapor products.
  • It requires that 30% of vapor product tax revenue be deposited with the state treasurer to be allocated to counties in equal amounts.
  • The funds are to be used specifically for youth nicotine prevention programs and services.
  • Effective date: July 1, 2026.

2. Key provisions and changes

  • New allocation rule: 30% of revenue from taxes on vapor products collected under Title 67, Chapter 4, Part 10 must be deposited with the state treasurer.
  • Distribution: The 30% must be allocated among the counties in equal amounts.
  • Destination use: Funds must be used for youth nicotine prevention programs and services.
  • No change to the remaining revenue: The bill does not specify other uses for the remaining 70% of vapor product tax revenue; it focuses on the 30% allocation to counties.
  • Effective date: July 1, 2026 (public welfare requires it).

3. Who/what is affected

  • State government: State Treasurer would receive and distribute 30% of vapor product tax revenue to counties.
  • Local governments (counties): Eligible for equal-share allocations of 30% of vapor product tax revenue, to be used for youth nicotine prevention programs and services.
  • Youth nicotine prevention programs and services: Primary beneficiaries of the new funding stream.

4. Fiscal impact and timeline

  • Fiscal impact (as analyzed by the Fiscal Review Committee):
    • State government revenue: General Fund decrease of approximately $5,280,000 in FY26-27 and subsequent years.
    • Local government revenue: Mandatory increase of approximately $5,280,000 in FY26-27 and subsequent years.
  • Assumptions used in the fiscal note:
    • A vapor product tax rate of 10% of the wholesale price.
    • In 2025, public Chapter 324 established the vapor tax framework; 12.5% of tax revenue previously earmarked and allocated to the Alcoholic Beverage Commission (ABC) with end-of-year unexpended funds reverting to the General Fund, net of DOR administration/enforcement costs.
    • The committee’s current revenue projection for vapor product tax collections is about $17.6 million in FY26-27, assumed constant thereafter for this analysis.
    • The 30% allocation translates to about $5.28 million moving from state General Fund to local governments starting in FY26-27.
  • Administrative note: Any administrative/enforcement costs would be handled within the Department of Revenue’s budget, as with other tax administration costs.

5. Procedural history (highlights)

  • Introduced and assigned to committees in 2026.
  • Passed in various stages within Committee structures; various scheduling actions noted.
  • Sponsorship: Senate sponsor Bo Watson (co-sponsor on companion HB 2360).

6. Practical considerations

  • The bill shifts a portion of vapor product tax revenue from state to local government, earmarked for youth nicotine prevention.
  • By design, the funding is distributed equally to counties, ensuring a uniform local-level investment in prevention across the state.
  • The impact depends on actual future vapor product tax receipts; the fiscal note uses a specific projection and assumes constant revenue beyond FY26-27.

If you’d like, I can provide a concise one-page briefing for policymakers or a side-by-side comparison with the current law and the companion HB 2360 text.

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

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