The maximum rate for the optional mineral severance tax levied by counties has been increased by Public Chapter 285.
Pursuant to the authority in T.C.A. § 67-7-201 et seq., counties may, by passage of a resolution by a two-thirds (2/3) vote, levy a tax on all sand, gravel, sandstone, chert and limestone severed from the ground within their jurisdiction. Under the previous law, the tax rate could not exceed fifteen cents (15¢) per ton.
Under the amended law, the tax may be levied at the following rates: (1) For a tax period that begins prior to July 1, 2025, fifteen cents (15¢) per ton; (2) For a tax period that begins on or after July 1, 2025, and prior to July 1, 2030, twenty cents (20¢) per ton; (3) For a tax period that begins on or after July 1, 2030, and prior to July 1, 2035, twenty-five cents (25¢) per ton; and (4) For a tax period that begins on or after July 1, 2035, and for subsequent tax periods, thirty cents (30¢) per ton.
Revenue from the mineral severance tax must be deposited into the county road fund and used for county road purposes. The new law requires counties to submit annual written reports to the comptroller of the treasury, the commissioner of transportation, the chair of the transportation and safety committee of the senate, and the chair of the committee of the house of representatives having jurisdiction over transportation issues, detailing the amount of revenue deposited into the county road fund during the previous fiscal year, the amount of revenue spent by the county, and how those expenditures have been designated and used for construction, maintenance, and repair of the county system.
CTAS has created model resolutions for counties interested in levying a mineral severance tax or increasing their mineral severance tax to the new limits.
If you have any questions, please feel free to reach out to your county government consultant.