Tennessee Tax Law Update : Changes in Grocery, Gift and Inheritance Taxes in Tennessee

Tennessee Tax Law Update : Changes in Grocery, Gift and Inheritance Taxes in Tennessee

Tennessee Tax Law Update

May 4, 2012  – Three bills were recently passed by Tennessee legislators and are important for you and your family. Governor Haslam is expected to quickly sign all three into law.

The first bill reduces the grocery tax from 5.5% to 5.25%. This bill, which passed unanimously, is scheduled to take effect on July 1.

The second retroactively repeals the Tennessee Gift Tax effective January 1, 2012. Currently, this tax applies to gifts over $13,000, and the tax rate ranges from 5.5% to 16%.  The federal gift tax exemption is $5.12 million, so you will have significant opportunities for gifting in 2012. Once the bill is signed into law, Connecticut will be the only state to impose this tax

The last one phases out the Tennessee Inheritance Tax by increasing the exemption and will completely eliminate it on January 1, 2016. Currently, this tax is levied on estates greater than $1 million.  The schedule for the phase out is:

2012 – $1,000,000 exemption
2013 – $1,250,000 exemption
2014 – $2,000,000 exemption
2015 – $5,000,000 exemption
2016 – Full Repeal

If you have questions about any of these tax laws, please contact the ATA office near you. Our partners would be happy to talk with you about them.