NASHVILLE – Gov. Bill Haslam on Friday signed into law a bill that phases out Tennessee’s Hall Income Tax on bond interest and investments by 2022, winning praise from proponents but drawing groans from local governments that share the proceeds of the tax.
His signing the bill to end the 6 percent Hall tax came despite the Republican governor’s lingering concerns that while state revenues are booming right now, enshrining the 1 percent cuts per year in statute could pose problems.
“The governor has long stated his wish to repeal the Hall Income Tax,” Haslam press secretary Jennifer Donnals said in a statement in response to questions. “It penalizes saving and investing, and because it is concentrated on a small number of people coming or going from Tennessee, there can be significant shifts in revenue, making it undependable.”
But Donnals acknowledged the governor “is concerned, however, with the approach taken to reduce and eliminate it” and noted the state “will not always have revenues like we had this year.”
The levy, enacted in 1929, raised about $300 million in tax year 2014, according to budget documents, and affects about 205,000 Tennesseans. The Tennessee Department of Revenue says the average liability per return was $1,446. Put another way, the median liability per return was $266, meaning half of the returns filed had a liability of $266 or less.