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SB 2042

Taxes, Sales - As introduced, authorizes the commissioner of revenue to issue a certificate of exemption to a taxpayer who qualifies for the sales and use tax exemption on qualified building materials used in the construction, expansion, or renovation of one or more qualified, new, or expanded warehouse or distribution facilities in paper or electronic medium. - Amends TCA Title 67, Chapter 6.

114th Regular Session (2025-2026) Introduced by Brent Taylor

Expands and extends sales tax exemptions for qualified building materials used in warehouse/distribution facility projects, with new filing deadlines through 2032.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
#sales #taxes
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WeVote Research Nonpartisan
Bill Summary · SB 2042

Summary: SB 2042 (Session 114, Tennessee) — Taxes, Sales Exemption for Qualified Building Materials

Purpose and Intent

  • Expands and clarifies the sales and use tax exemption for qualified building materials used in construction, expansion, or renovation of qualified warehouse or distribution facilities.
  • Authorizes the Tennessee Department of Revenue (DOR) to issue exemption certificates to taxpayers for qualified building materials, available in paper or electronic form.
  • Establishes updated definitions and timelines to extend the eligible period for purchases that qualify as exempt.

Key Provisions (as amended)

Definitions and Periods

  • Qualified building materials (as amended):
    • Material purchased during the period July 1, 2019, to December 31, 2026, that becomes part of the real property of the facility; and
    • Material purchased during the period July 1, 2026, to December 31, 2032, that becomes part of the real property of the facility.
  • Qualified capital investment period:
    • January 1, 2019, to December 31, 2026; and
    • January 1, 2026, to December 31, 2032.
  • The amendment effectively expands the window for eligible materials to include purchases through 2032 for certain investments, aligning with the extended capital investment period.

Application Timing

  • Exemption applications for:
    • Qualified materials under the 2019–2026 period must be filed prior to October 1, 2019.
    • Qualified materials under the 2026–2032 period must be filed prior to October 1, 2026.
  • This creates discrete filing deadlines tied to each defined capital investment period.

Implementation and Administration

  • The exemption remains administered under Tennessee Code Annotated § 67-6-318(b) and (e), with the Department of Revenue issuing exemption certificates (in paper or electronic format) upon approval.
  • The act clarifies the mechanics of eligibility and the process for certificate issuance.

Effective Date

  • The act takes effect upon becoming law.

Affected Parties and Impacts

Beneficiaries

  • Taxpayers who purchase qualified building materials for construction, expansion, or renovation of qualified warehouse or distribution facilities in Tennessee.
  • Specifically, developers, builders, and operators of new or expanded warehouse/distribution facilities.

Government and Tax Revenue

  • The fiscal notes indicate the change is not expected to have a significant impact on overall state or local government expenditures.
  • The amended bill projects foregone state and local revenue during the qualified investment periods (2026–2032) due to the exemption, with estimated annual foregone revenue appearing in the fiscal memorandum (broken down by year and by state vs. local impact). For example, initial years show substantial foregone revenue, tapering in later years.

Fiscal Implications (as Amended)

State Government Revenue (Foregone)

  • FY 2026-27: approximately $7.50 million
  • FY 2027-28: approximately $7.14 million
  • FY 2028-29: approximately $0.57 million
  • FY 2029-30: approximately $0.016 million
  • FY 2030-31: approximately $0.013 million
  • FY 2031-32: approximately $0.726 million
  • FY 2032-33: approximately $0.120 million

Local Government Revenue (Foregone)

  • FY 2026-27: approximately $2.41 million
  • FY 2027-28: approximately $2.30 million
  • FY 2028-29: approximately $0.185 million
  • FY 2029-30: approximately $0.005 million
  • FY 2030-31: approximately $0.004 million
  • FY 2031-32: approximately $0.234 million
  • FY 2032-33: approximately $0.039 million

Note

  • The fiscal notes reflect a period of January 1, 2026, through December 31, 2032, for the qualified capital investment period and provide estimated foregone revenue based on assumed qualified building material costs and project investments provided by the Department of Revenue.

Timeline and Status (as of the latest action)

  • Introduced and referred to committee in early 2026.
  • Amendments circulated; Bill amended to include expanded definitions and extended filing deadlines.
  • Timeline events include committee consideration in spring 2026, with action history indicating progress through Senate Finance, Ways, and Means, including subcommittee actions and amendments.

Practical Takeaways

  • The bill broadens and extends the window for sales tax exemptions on building materials used in constructing or expanding warehouse/distribution facilities.
  • It requires timely application submissions tied to defined investment periods (prior to Oct 1 of the applicable year).
  • The proposal is designed to incentivize investment in large-scale distribution capacity by reducing upfront tax costs associated with qualified building materials.
  • Depending on future legislative action and economic conditions, the exemption could result in sizable foregone revenue for state and local governments during the 2026–2032 period.

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

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