NASHVILLE – The state House voted today to begin phasing out Tennessee’s inheritance tax – often called the death tax – in 2016 and reducing the sales tax on groceries.
The inheritance tax legislation, which passed 88-8, increases to exemption for high-dollar estimates from $1 million to $1.25 million in its first year. State government would see $14.1 million less revenue as a result. When the tax is entirely eliminated, it will cost the state an estimated $94.1 million annually.
The sales tax bill passed 96-0. Both measures now move to the Senate.
Reducing the sales tax on groceries from 5.5 percent to 5.25 percent would result in a $22 million loss to the state.
Republican Gov. Bill Haslam intends to come back next year with another quarter-penny reduction, bringing it down to 5 percent at a total cost of $44 million over the two-year period.