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SB 2277

Taxes, Sales - As introduced, exempts the retail sale of generic food products from the food retail sales tax. - Amends TCA Title 67, Chapter 6.

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

Exempts private-label generic foods from Tennessee 4% sales tax starting July 1, 2026, reducing state and local tax revenue.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/20/2026
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Bill Summary · SB 2277

Summary of Bill SB 2277 (Session 114, Tennessee)

Jurisdiction: Tennessee | Bill Type: Tax/Finance | Introduced as: SB 2277 (Briggs) / HB 2437 (McKenzie)

Purpose and Intent

  • The bill seeks to exempt the retail sale of generic food products for human consumption from the state's food retail sales tax.
  • It amends Tennessee Code Annotated, Title 67, Chapter 6.
  • Effective date: July 1, 2026.

Key Provisions

  • Section 67-6-228 (amended):

    • Current framework: Retail sale of food and food ingredients for human consumption taxed at 4% of the sales price (with exceptions noted in other subdivisions).
    • New exemption: The retail sale of generic food products for human consumption would be exempt from the sales tax levied by this chapter.
    • Definition of “generic food products”: Food products produced by a third party under contract with a grocery wholesaler or grocery retailer, on behalf of and under that retailer’s brand (private-label or store-brand items produced by a third party for the retailer).

  • Effective date: The act takes effect July 1, 2026.

Who It Affects

  • Consumers purchasing generic or store-brand food products produced under contract by third parties for grocery chains.
  • Grocery wholesalers and grocery retailers that contract with third-party producers to create private-label/generic products.
  • Local governments and state government through revenue allocations impacted by the tax exemption (see Fiscal Impact).

Fiscal Impact (as analyzed in the fiscal note)

  • State government revenue:
    • Net impact: Estimated decrease of approximately $170.7 million in FY26-27 and subsequent years.
  • Local government revenue:
    • Mandatory net impact: Estimated decrease of approximately $121.3 million in FY26-27 and subsequent years.
    • Rationale: Local governments collect local option sales taxes and receive state-shared allocations; removing the state sales tax on these items reduces both state and local revenue streams. Local tax base would also be affected due to the elimination of the local option tax on these items.

  • Economic effect assumptions:

    • Generic foods constitute about 21.3% of total grocery purchases (per a 2026 private-label report).
    • Total taxable food sales were about $22.14 billion; generic portion attributed to tax base is used to estimate the revenue loss.
    • Half of the tax savings from the exemption (i.e., about $153.3 million in annual savings) are assumed to be re-spent on sales-taxable goods and services, with modest anticipated changes in state and local tax collections due to subsequent spending.
    • Estimated potential adjustments to state revenue from this re-spending: net decrease around $170.7 million; local revenue net decrease around $121.3 million.

  • Additional notes in the fiscal analysis:

    • The calculation includes adjustments due to the state-shared allocation and apportionment to local governments.
    • The analysis uses current (2024-25) tax base figures and projected growth rates for FY25-26 and FY26-27.

Procedural Timeline and Status

  • Legislative history:
    • Introduced in 2026; co-sponsored by Senator Richard Briggs (and House sponsor H.B. 2437 by McKenzie).
    • Passed initial readings and moved through committees with various actions, including referrals to Senate Finance, Ways & Means.
    • As of the last update, the bill was scheduled for committee consideration in April 2026.
  • Next steps (typical for this stage):
    • Committee hearings and potential amendments.
    • Floor votes in the Senate and House if advanced.
    • Potential signature by the Governor or override considerations if applicable.

Summary in Plain Language

SB 2277 would remove Tennessee’s 4% sales tax on the retail sale of generic (private-label) food products sold through grocery stores, starting July 1, 2026. “Generic food products” are defined as items produced by a third party under contract with a grocery retailer to sell under the retailer’s brand. The exemption would reduce state and local sales tax revenue, with the fiscal note estimating roughly $170.7 million in annual state losses and $121.3 million in annual local losses from FY26-27 onward. About half of the tax savings is assumed to circulate back into the economy through increased spending on taxable goods and services, partially offsetting revenue losses but not eliminating them. The policy affects consumers, retailers (particularly private-label producers), and local governments through changes to tax collections and state-shared allocations.

If you’d like, I can provide a brief pros/cons outline or compare this bill to similar private-label tax exemptions in other states.

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

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