Any county by resolution of its legislative body can levy a sales tax on the same privileges subject to the state sales tax; however, no local sales tax or rate increase in the local sales tax can become effective until approved in an election in the county or city levying it.
If the county has levied the maximum rate of 2.75 percent, no city in the county can levy a sales tax. If a county has a sales tax rate less than the maximum, a city may levy a rate up to the difference between the county rate and the maximum.
Additionally, the local option sales tax may only apply to single purchases of tangible personal property up to $1,600. This limitation results in a “cap” on the local option sales tax that can be collected on taxable single articles. The cap is calculated as the base (the limitation on single purchases as adopted by the county) multiplied by the rate. For example, a county that has adopted the maximum base of $1,600 with a rate in place of 2.25 percent would have a tax cap of $36 on any single article of purchase.
The required distribution of county local option sales tax revenue (regardless of the location of the sale) is 50 percent to education (in the same manner as the property tax) and 50 percent to the location where the sale occurred.1
For more information, please see Local Option Sales Tax (CTAS-1618) in e-Li.
1 T.C.A. §67-6-712
The hotel/motel tax, which is a tax on the privilege of occupancy of hotel and motel rooms, is established in counties through the adoption of a private act.1 Rates vary according to the terms of the private act. The distribution of the tax is set forth in the private act. The rates and distributions are shown below.
For more information, please see Hotel-Motel Tax (CTAS-1639) in e-Li.
1 Davidson County is the exception as it has utilized a general law that applies only to metropolitan governments.
By a two-thirds vote, counties may levy a tax on all sand, gravel, sandstone, chert, and limestone severed from the ground within the county at a rate of up to $0.15 per ton. Prior to 1984, the county mineral severance tax could be authorized by private act only. Private acts in existence when the general law was passed remain in effect for all purposes, except that the rate may not exceed $0.15 per ton. Counties who levied the tax under the general law are required to distribute the tax to the county highway fund.1
For more information, please see County Mineral Severance Tax (General Law) - CTAS-1614 and County Mineral Severance Tax (Private Act) - CTAS-1615.
1 T.C.A. §§ 67-7-201 through 67-7-221