06 Feb Is the Tennessee Hall Tax on Interest and Dividends going away?

Tennessee Tax Hall

Yes, it appears the Tennessee Hall Tax is going away. Governor Bill Haslam signed into law a bill that reduces the income tax rate from 6% to 5% for the tax year 2016 on returns due April 2017. 

The bill says it is the “Legislative Intent” that the tax is reduced by 1 percent annually starting in 2017.  This law will require new legislation each year. 

The law eliminates the tax entirely in 2022 regardless of whether the annual reductions occur. The Hall tax was enacted in 1929 on tax dividends and certain interest income.  The first $1,250 in taxable dividend and interest earnings and the first $2,500 for all joint filing is tax-exempt.  Taxpayers 65 and older are exempt from the Hall tax if their total income from all sources is $68,000 or less for joint filing and $37,000or less for single filing.

Paul B. Vantrease, Jr., CPA