Tennessee governor proposes 2-week sales tax holiday on food sales

Gov. Bill Lee proposes two-week sales tax holiday on food

MEMPHIS, Tenn. (WMC) - Governor Bill Lee is proposing a two-week sales tax holiday on all grocery sales, restaurant purchases and prepared food.

It’s part of Lee’s amendment to the proposed fiscal 2021-22 budget. The amendment includes $580 million in available funds.

It calls for $100 million to offset two weeks of tax-free meals at restaurants and tax-free meals at restaurants and tax-free groceries in the state.

Dates for the sales tax holidays have not been released. They must first be approved by the legislature in the final budget.

“This proposal supports Tennesseans by strategically investing in long-term initiatives that will move our state forward,” said Lee. “I’m especially proud to provide tax cuts to get money back to Tennesseans to encourage them to frequent industries that have been disproportionately and negatively impacted this year.”

Notable investments in the budget amendment include:

Tax Cuts

  • $25M for a two-week sales tax holiday for groceries
  • $75M for a two-week sales tax holiday for restaurants and all prepared food
  • $16M to reduce the professional privilege tax by 25 percent

K-12 Education and Mental Health

  • $250M trust fund to assist K-12 families who are facing significant mental health issues in the wake of COVID-19
  • $18.5M to transportation to students for summer learning
  • $2M to provide an additional 4 high quality, grade aligned books and resources over the summer for the 88,000 rising first graders in Tennessee

Higher Education

  • $79M to eliminate current TCAT waitlists statewide, currently at 11,400 students
  • $25M to Tennessee Promise to permit increases in the Hope Scholarship
  • $4M to increase Agriculture Extension Agents at University of Tennessee and Tennessee State University

Rural & Agriculture

  • $50K to support the state fair (in addition to the $250,000 recurring in originally proposed budget for total of $300K and $5M non-recurring)
  • $3M to provide additional funding for rural projects as part of the Rural Economic Opportunity Fund (in addition to $21M in originally proposed budget for total of $24M)


  • $500K to provide gun safety programming for children
  • $17M to replace radios for state troopers
  • $18M to improve the statewide disaster communications system
  • $680K to add 4 new Homeland Security Agents

Economic Development

  • $5M to provide grants to restore and preserve historic downtowns across the state
  • $3M to increase employment in Tennessee through the Small Business Innovation program


  • $3M recurring and an additional $10M nonrecurring to provide additional direct funding to airports across Tennessee through the Transportation Equity Fund (total $50M investment in air infrastructure)

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