Tennessee Tax Update May 2018

With the implementation of the Tennessee’s online tax system and recent legislative highlights, Crosslin’s State and Local Tax (SALT) department wanted to provide a tax update regarding these changes.  The following tax update discusses the state’s TNTAP system as well as new legislation enacted by the Tennessee General Assembly.

TNTAP to Add New Taxes

TNTAP (Tennessee Taxpayer Access Point) is the Tennessee Department of Revenue’s online tax system for filing and paying liability.  This system is being rolled out in phases.  Several taxes have been available on TNTAP since last year including sales/use, liquor-by-the-drink, professional privilege, and tobacco taxes.   The latest rollout phase (May 29, 2018) will add the following tax types to the system:

  1. Franchise & Excise Tax
  2. Hall Income Tax
  3. Business Tax
  4. Motor Carrier Taxes

2018 Legislative Highlights

The Tennessee General Assembly each year enacts legislation that impacts Tennessee taxpayers.  The 2018 session recently ended and, with 2018 being an election year with the anticipation of a new governor, this year’s session was fairly light regarding tax initiatives and changes.

Below are a few of the highlights:

  • IMPROVE Act changes that become effective in 2018:
    • Hall Income Tax rate is reduced to 3% for tax years beginning after January 1, 2018 and will further be reduced to 2% for tax years beginning after January 1, 2019.
    • Motor Fuel Tax increases from $.24 to $.25 per gallon as of July 1, 2018.
    • Diesel Fuel Tax increases from $.21 to $.25 per gallon as of July 1, 2018.
  • Hall Tax Angel Investor Credit:
    • For tax years beginning after January 1, 2017, the Angel Investor Hall income tax credit has been expanded to include indirect cash investment made by qualified angel investors.
  • Tennessee Decoupling from the Federal Tax Cuts and Jobs Act:
    • For tax years beginning on or after January 1, 2020
      • The business interest deduction cap.
      • Inclusion of state grants in federal taxable income
  • New Adult Performance Business Tax effective July 1, 2018:
    • New legislation provides for a $2 tax on each entry into an adult performance business in the state of Tennessee.
    • Revenue collected is intended to be allocated to programs for victims of sex trafficking.
  • Sunday Wine Sales Approved:
    • Wine sales by retail food stores are authorized beginning January 1, 2019.
    • Sales of wine and alcoholic beverages by licensed liquor stores on Sunday are authorized immediately.

The SALT group at Crosslin stands ready to assist you in understanding these tax changes or any other tax-related questions.  Please contact SALT Director Mark Loftis (mark.loftis@crosslinpc.com or 615-320-5500) with any questions you may have.  As always, we appreciate your business!