Taxes, Privilege - As introduced, removes licensed attorneys who have practiced more than 20 years from the application of the professional privilege tax. - Amends TCA Title 67, Chapter 4, Part 17.

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

exempts Tennessee attorneys with 20+ years practice from the $400 annual occupational privilege tax after May 31, 2027.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026

Main purpose and intent

SB 1963 proposes an exemption from the Tennessee occupational privilege tax for licensed attorneys who have practiced law for 20 years or more. The bill is part of the broader framework governing the occupational privilege tax (OPT) in Tennessee and would apply to privilege tax due after May 31, 2027.

Key provisions and changes

Adds an exemption: Attorneys licensed in Tennessee who have practiced law for 20 years or more would be exempt from the occupational privilege tax.

Scope of exemption: The exemption applies only to the OPT for attorneys with at least 20 years of practice. Attorneys who hold multiple licenses (in two or more professions) would still pay the OPT for any other licenses required to maintain those additional licenses.

Effective date: The exemption begins with the first OPT payment due after May 31, 2027; the next due date is June 1, 2027.

Administrative framework: The tax is a $400 annual OPT paid by individuals engaged in specified occupations in Tennessee, with potential for employers to remit on behalf of employees.

Interaction with state entities: State employees who are attorneys would be subject to the same exemption if they meet the 20-year practice threshold.

Affected parties and scope

Primary beneficiaries: Tennessee-licensed attorneys who have practiced law for 20 years or more.

Secondary considerations: Attorneys with multiple professional licenses remain subject to OPT for other licenses.

Fiscal note considerations: The Department of Revenue and the Board of Professional Responsibility provide data used to estimate the number of eligible attorneys (approximately 8,650 practicing 20+ years, based on 45.4% of active licenses) and to project fiscal impacts.

Procedural and timeline aspects

Fiscal impact: The bill would reduce state general fund revenue and state expenditures due to the exemption:

Recurring state revenue decrease: approximately $3,460,000 annually starting FY26-27.
Recurring state expenditures decrease: approximately $397,200 annually starting FY26-27 (related to fewer OPT payments for state employees who are attorneys).
Local impact: Mandatory increase in local sales tax revenue due to economic activity from tax savings, estimated at about $33,800 annually starting FY26-27.

Net fiscal effect: After considering the spillover into sales tax revenue and local effects, the net decrease in state revenue is estimated at about $3,377,168 for FY26-27 and onward.

Economic ripple: It is assumed that 50% of the tax savings (roughly $1.228 million) would be spent on sales-taxable goods and services, generating a partial offset in state revenue via increased sales tax receipts.

Summary assessment

SB 1963 changes the tax landscape for a substantial segment of experienced Tennessee attorneys by removing their obligation to pay the occupational privilege tax after a 20-year practice threshold. The bill balances revenue and exemptions with an anticipated broader economic impact through increased consumer spending, while maintaining tax obligations for those with additional professional licenses. The proposal becomes effective for payments due after May 31, 2027.

Bill