On May 20, Gov. Bill Haslam signed into law the bill that will effectively do away with the Hall tax in Tennessee. The bill was voted and approved by the state Legislature on April 22 with votes of 66-17 in the House and 29-1 in the Senate.
The bill will phase out the Hall tax by 1-percent increments over the next six years.
The Hall tax is a capital gains tax of 6 percent on stock dividends and interest earnings over $1,250 per household, or $2,500 for married couples who joint file their taxes.
The town of Signal Mountain received nearly $960,000 from the Hall tax in 2015, which came out to be roughly 15 percent of the municipality’s revenue, town officials said. According to the state, the town of Walden received nearly $173,000 in 2015 from the Hall tax.
“This will certainly make a large difference in our budget,” Signal Mountain Mayor Dick Gee said in an interview after the Legislature voted to approve the bill. “We’ll have to develop a plan to replace that income to maintain the level of service we provide today.”
Mayor Bill Trohanis of Walden echoed Gee’s sentiments, saying the reduction will require municipalities to critique their budgets even more.
The tax raised about $300 million statewide in tax year 2014, according to budget documents, and affects about 205,000 Tennesseans.