The House and Senate voted Friday to repeal the state’s Hall tax on investment income, now at 6 percent, over a period the next six years at the rate of 1 percent per year.
From the Richard Locker report:
If Gov. Bill Haslam allows the bill to become law, the Hall tax rate drops from its current 6 percent to 5 percent effective with tax year 2016 — reflected on tax returns due by April 15, 2017 — and eliminates the tax entirely for tax year 2022.
About 200,000 Tennessee households pay the Hall tax.
The Hall tax, enacted in 1929, taxes income from taxable stock dividends and certain interest. Taxpayers 65 and up are exempt from the Hall tax if their total income from all sources is $68,000 or less for joint filers and $37,000 or less for single filers.
In addition, the first $1,250 in taxable dividend and interest earnings for all single filers and the first $2,500 for all joint filers is tax-exempt. The tax isn’t levied on interest earned on savings accounts, certificates of deposit, government bonds, credit unions, bank money market accounts and dividends from bank stock, insurance companies, credit unions and other sources, which are exempt.
The legislature’s budget amendment approved last week accounts for a $27.7 million loss in state revenue as a result of the rate cut (for the first year). Local governments will lost $14 million from the rate cut (again in the first year).
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Note: This post will be expanded and updated.