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SB 1465

Taxes, Sales - As introduced, exempts from sales and use tax labor and service costs made as part of the sale of a taxable item of tangible personal property; exempts from sales and use tax repair and installation labor performed on tangible personal property. - Amends TCA Title 67, Chapter 6.

114th Regular Session (2025-2026) Introduced by Adam Lowe

Exempts labor and service costs from sales tax when bundled with tangible property sales, reducing revenue and potentially benefiting higher-value purchases disproportionately.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
#sales #taxes
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Bill Summary · SB 1465

Legislative bill overview

SB 1465 would exempt labor and service costs from Tennessee's sales and use tax when those costs are part of selling tangible personal property, as well as exempt repair and installation labor on tangible goods. The bill modifies Tennessee's tax code to treat labor associated with selling or servicing physical items differently from current tax treatment.

Why is this important

This could reduce effective prices for consumers purchasing goods with installation or repair services, and may lower business costs for retailers and service providers. However, it would also reduce state tax revenue, potentially requiring adjustments to public funding or other tax increases to compensate.

Potential points of contention

  • Revenue impact: Eliminating tax on service labor could significantly reduce state tax collections, requiring lawmakers to either cut spending or find alternative revenue sources
  • Definitional complexity: Determining what constitutes "labor and service costs made as part of the sale" versus standalone services could create ambiguity and enforcement challenges
  • Equity concerns: The exemption may primarily benefit consumers purchasing higher-value items requiring installation, while lower-income consumers buying simpler goods see minimal benefit
  • Business classification issues: Could create disputes over whether certain service providers qualify for the exemption or must charge sales tax

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

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