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SB 337

Taxes, Sales - As introduced, authorizes certain counties to levy a local option sales tax at the rate of 3.75 percent, instead of a maximum of 2.75 percent, if the revenue from the increase in such tax is used by the county exclusively for the construction of a new county jail or to retire debt, including principal and interest and related expenses, on such construction. - Amends TCA Title 67, Chapter 6, Part 7.

114th Regular Session (2025-2026) Introduced by Raumesh Akbari

Tennessee counties can raise sales tax to 3.75% if revenue exclusively funds jail construction or related debt repayment.

Recommended for passage, refer to Senate Finance, Ways, and Means Committee
#sales #taxes
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Bill Summary · SB 337

Legislative bill overview

SB 337 allows certain Tennessee counties to increase their local sales tax from a maximum of 2.75% to 3.75%—a 1 percentage point increase—but only if revenues from this increase are dedicated exclusively to building new county jails or paying off existing jail construction debt. The bill amends Tennessee's tax code to create this limited, purpose-driven exception to current sales tax caps.

Why is this important

County jails are critical criminal justice infrastructure, and many Tennessee counties face aging facilities or overcrowding issues. This bill provides a new funding mechanism for jail construction without requiring state appropriations, though it does increase the tax burden on county residents and businesses. The outcome directly affects both public safety capacity and local consumer costs.

Potential points of contention

  • Regressive taxation impact: Sales taxes disproportionately burden lower-income residents who spend more of their income on taxable goods, raising equity concerns about who bears the cost of criminal justice infrastructure
  • Scope and accountability: The bill doesn't specify which counties qualify, how long the increased tax remains in effect, or require voter approval, leaving implementation details and democratic oversight unclear
  • Alternative funding sources: Critics may argue counties should explore other revenue options (bonds, state funding, efficiency measures) before raising sales taxes, particularly given Tennessee's existing sales tax burden relative to other states

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

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