Tennessee Grocery Sales Tax Break Is Missing Some Consumers
The Tennessee Works Tax Act provides a one-time sales tax break on food and ingredients, but many consumers either aren’t aware of it or say it provides little help.
By Lonnie Lee Hood [Tennessee Lookout -CC BY-NC-ND 4.0] –
In May, Gov. Bill Lee signed the Tennessee Works Tax Act, the single largest tax cut in state history designed to provide an estimated $400 million in savings for consumers, families and businesses. Along with $164 million in small business tax relief and $64 million to simplify tax administration, the bill included a one-time sales tax break on food and ingredients from Aug. 1 to Oct. 31. The food tax break began only days after the annual back-to-school sales tax holiday ended July 30.
But some Tennessee shoppers say they’ve barely noticed the cut.
“You can go to the grocery store, buy everything you need, and pay no sales tax,” Lee said in a July video announcement. “We try to cut taxes every chance we get in Tennessee because we want Tennesseeans to keep every bit of their hard-earned income as they can. We thought there’s no better time to do it.”
Despite Lee’s statement, Tennesseans may not feel the impact as much as they’d like to. One shopper said in a social media comment they had no clue the break was even happening, and another said they saved only $12 on a recent purchase. They’re not alone; other consumers are having the same experience.
Erin O’Dowd, an Ashland City resident and singer-songwriter, said that prior to seeing a post asking for shoppers’ experiences, she was unaware the tax break was happening. O’Dowd normally has her groceries delivered from a local Walmart store, but said she also visits Publix and Aldi occasionally. O’Dowd said she might not have been aware of the news because she lives in a local “bubble,” but she was also surprised to hear Tennessee was offering a sales tax break and decided to research the bill online.
“Our politics don’t seem to follow any sort of thing like that,” O’Dowd told the Lookout. “I found the governor’s statement interesting. He spun it at an angle to make himself look good. It made me chuckle because it only lasts three months. I grew up in Florida. They don’t have taxes on groceries.”
O’Dowd said that now she’s aware of the break she’ll continue meal prepping and might indulge in some items she wouldn’t otherwise buy, like fruit or juice.
Other shoppers, like Nashville resident Trevarius Newman, heard about the tax break when it was announced but say they haven’t saved as much money as they hoped. Newman said that he checks his grocery receipts regularly, and that there has been a $5 or $6 difference between purchases he made in December and this month. Newman shops about once a week at Walmart in person, spending between $70 and $100 each time. He said between a lack of awareness of the break and increased prices, it’s not really a surprise some consumers haven’t noticed — and that only one of his retail coworkers was aware when he asked around.
“Inflation’s been high,” Newman told the Lookout. “Depending on what gets amplified and what doesn’t, coupled with the lack of awareness on a tax break for groceries, it all just gets washed out.”
Newman said additional advertisement by the government might help. However, Franklin Michello, director of the Master of Science in Finance program at Middle Tennessee State University, said that he believes the lack of awareness is likely due to the types of news sources consumers pay attention to. Michello said residents who don’t keep track of local consumer news are far less likely to know about the break, and that he personally informed his neighbors about the holiday.
As for high prices, they may even be elevated because of the break, according to Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee Knoxville. Bruce told the Lookout that shop owners may raise prices or forgo discounts and sales when they see a sales tax break, but that further study would be needed after the break is over to know for sure.
Bruce said a temporary holiday was likely less objectionable to legislators than a permanent reduction or other cost-cutting policy because Tennessee is in a period of strong economic growth now, but that it might not always be the case. A short-term reduction is superior, he said, because it would be difficult to repeal a permanent tax cut during times of economic distress.
Once aware, however, Michello said consumers hoping to make the most of the holiday should stock up on non-perishables like toilet paper, rice and beans while they still can. Bruce said people should also keep an eye on prices, which change frequently on a variety of items.
“There’s a lot more than just the tax rate,” Bruce said. “It’s a matter of timing sales, and getting things you need. If you can wait for bigger ticket items, remember the prices move too.”
We own a small business and stop along 411 South in Blount County daily to buy bottled/canned drinks for the workers and always have to pay the sales tax. We have told them we are on a “tax holiday” and they try saying they are exempt, etc. I have called TDOR to report them but no way for us to get our money back, what little it is. Someone should look into why these stations are not honoring the no sales tax on non-prepared food & drink.
As nancy pelosi would say, crumbs. Thanks gov. lee for a whole lot of nothing. If you really wanted to help out the people of Tennessee you could’ve refunded our property tax for this year. Now that would have been a real savings instead of giving us crumbs.
In God we trust not government or man.
Have a blessed.
We don’t pay a “STATE” property tax in Tennessee! That is an issue for your County Commission and/or City Council…good luck on trying to take it up with them.
While I agree it’s crumbs, your specific preference for tax relief is not in his or the Legislature’s power. That said, they DID have to power to make it permanent (as many other states don’t charge sales tax on groceries), and they chose not to. This way, he can call more special sessions to strive for Red Flag laws to keep his federal deep state bosses & anti-American PAC handlers happy.
“You can go to the grocery store, buy everything you need, and pay no sales tax,” Lee said in a July video announcement. “We try to cut taxes every chance we get in Tennessee because we want Tennesseeans to keep every bit of their hard-earned income as they can. We thought there’s no better time to do it.”
THE SUPPOSED BREAK ONLY AFFECTED HUMAN FOOD, NO TP, CLEANING, HYGIENE, OTC MEDS OR PET FOOD. When you have to shop in Shelby County you pay an extra 2.75% sales tax. And risk your life. Gas was higher too. That has 2 state taxes on it besides the Federal tax. We stopped eating out during the lockdown and never missed it. No real sales in August or September fit into specific health-related diets. Coupons are store-specific, not like when they were in the Sunday newspaper, people read online now. Walmart doesn’t use coupons but does take the odd one you might get in a product. My biggest buys fall into the NON sales tax-covered items. NEXIUM is $28 a month, Fixodent is $7, and pet food has hit $50 and up. TP is around $20 for a month on store brand, cleaning the same prices, as the manufacturers moved to giant sizes.
“You can go to the grocery store, buy everything you need, and pay no sales tax,” Lee said in a July video announcement.
THE SUPPOSED BREAK ONLY AFFECTED HUMAN FOOD, NO TP, CLEANING, HYGIENE, OTC MEDS OR PET FOOD. When you have to shop in Shelby County you pay an extra 2.75% sales tax. And risk your life. Gas was higher too. That has 2 state taxes on it besides the Federal tax. We stopped eating out during the lockdown and never missed it. No real sales in August or September fit into specific health-related diets. Coupons are store-specific, not like when they were in the Sunday newspaper, people read online now. Walmart doesn’t use coupons but does take the odd one you might get in a product. My biggest buys fall into the NON sales tax-covered items. NEXIUM is $28 a month, Fixodent is $7, and pet food has hit $50 and up. TP is around $20 for a month on store brand, cleaning the same prices, as the manufacturers moved to giant sizes.
“You can go to the grocery store, buy everything you need, and pay no sales tax,” Lee said in a July video announcement.
THE SUPPOSED BREAK ONLY AFFECTED HUMAN FOOD, NO TP, CLEANING, HYGIENE, OTC MEDS OR PET FOOD. When you have to shop in Shelby County you pay an extra 2.75% sales tax. And risk your life. Gas was higher too. That has 2 state taxes on it besides the Federal tax. We stopped eating out during the lockdown and never missed it. No real sales in August or September fit into specific health-related diets. Coupons are store-specific, not like when they were in the Sunday newspaper, people read online now. Walmart doesn’t use coupons but does take the odd one you might get in a product. My biggest buys fall into the NON sales tax-covered items.
It does help but the tax should be eliminated period. Even in godforsaken Illinois the sales tax on food is only 1%. Taxing food is wrong! Get rid of it!