Charles Sargent, R-Franklin, Tenn.NASHVILLE – The state House on Thursday approved proposals to phase out Tennessee’s inheritance tax by 2016 and lower the sales tax on groceries.
The inheritance tax legislation, which critics dub the “death tax,” passed 88-8. Members then approved the sales tax measure, which reduces the levy from 5.5 percent to 5.25 percent, by 96-0.
Both bills now go to the Senate. Republican Gov. Bill Haslam has included them in his proposed 2012-13 budget.
While the inheritance tax passed the Republican-controlled House with bipartisan support, several Democrats questioned the fairness of moving to eliminate the inheritance tax, which brings in on average about $94 million a year.
The first phase of the proposal would increase the exemption on estates to$1.25 million at a cost of about $14 million. The second year increases the exemptionto $2 million. Year 3, which takes effect in 2015, increases the exemption to $5 million before eliminating the inheritance tax entirely in 2016.