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SB 1842

Taxes, Privilege - As introduced, reduces professional privilege tax from $400 to $200 per year for attorneys in tax years that begin on and after June 1, 2027. - Amends TCA Title 67, Chapter 4, Part 17.

114th Regular Session (2025-2026) Introduced by Richard Briggs

Reduces Tennessee attorney occupational privilege tax from $400 to $200 annually, starting after May 31, 2027.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/21/2026
#privilege #taxes
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Bill Summary · SB 1842

Summary of SB 1842 (Session 114) – Tennessee

Purpose

SB 1842, as amended, reduces the occupational privilege tax (OPT) for Tennessee-licensed attorneys from $400 to $200 per year, with the new rate applying to payments due after May 31, 2027. The bill amends Tenn. Code Ann. Title 67, Chapter 4, Part 17.

Key Provisions and Changes

  • Reduction of OPT for attorneys: The annual OPT for Tennessee-licensed attorneys is cut in half—from $400 to $200—beginning with the first payment due after May 31, 2027 (the due date is June 1, 2027).
  • Scope of impact: The statewide OPT is paid by attorneys subject to the tax; employers (including government entities) may remit the tax on behalf of employees.
  • Effective date and fiscal note: The fiscal impact reflects the new $200 rate starting in FY 26-27. The first year with actual revenue changes is the fiscal year that includes/begins after May 31, 2027.
  • Estimated counts: Department of Revenue estimates about 24,292 attorneys subject to the tax as of the 2027 date, including roughly 2,187 state employees whose OPT would be paid by the State on June 1, 2027. Approximately 80.17% are expected to reside in-state; about 19.83% out-of-state.
  • Net fiscal impact (state):
    • State revenue: Reduced by approximately $4,738,800 to $4,858,400 annualized (the memo shows $4,738,800 net in the amended version; the two memos provide related figures).
    • State expenditures: Reduced by about $437,400 to reflect the tax cut’s effect on administrative costs.
  • Local impact: Local governments would see a mandatory increase in sales tax revenue (driven by a portion of the saved income being spent) of about $48,800 annually.
  • Economic spillover from tax savings:
    • It is assumed that about 50% of attorney tax savings would be spent on Tennessee taxable goods and services.
    • This generates a small increase in state sales tax revenue (roughly $119,564 annually) and contributes to a net statewide revenue decrease when considering the tax savings and partial tax revenue recapture.
    • Local sales tax revenue is adjusted accordingly to reflect increased consumer spending.

Affected Parties

  • Primary: Tennessee-licensed attorneys (taxpayers) who pay the OPT.
  • Secondary: State and local governments (through changes in tax revenue flows and associated sales tax dynamics).
  • Employers and government entities that remit OPT on behalf of employees.

Procedural/TImeline Notes

  • The change becomes effective for OPT due after May 31, 2027.
  • The bill’s amendments and fiscal implications were reviewed by the Fiscal Review Committee and incorporated into the fiscal notes.
  • Legislative action history shows consideration in the Senate Finance, Ways & Means Committee, with amendments proposed and passed in later readings.

Bottom Line

SB 1842 proposes a significant reduction in the occupational privilege tax for attorneys, halving the rate from $400 to $200 annually beginning with the 2027 payment cycle, with anticipated net reductions in state revenue and modest local tax revenue adjustments, alongside potential measurable effects on state and local budgets and economic activity related to increased after-tax spending.

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

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