Legislature approves bill eliminating professional privilege tax for 15 of the state’s licensed professions
(NASHVILLE,Tenn)- The General Assembly passed major tax cut legislation before adjourning the 2019 session, eliminating the $400 professional privilege tax levied on licensed individuals annually in 15 professions in Tennessee. Senate Bill 364/House Bill 13 by Sen. Brian Kelsey and Rep. Jay Reedy, repeals the ta
x for accountants, architects, sports agents, audiologists, chiropractors, dentists, engineers, landscape architects, optometrists, pharmacists, podiatrists, psychologists, real estate brokers, speech pathologists, and veterinarians.
“The idea that earning a living is a privilege is insulting to hardworking Tennesseans,” said Sen. Kelsey. “For many years, this tax has unfairly singled out individuals in 22 of the state’s 100 licensed professions by taxing them for the so-called ‘privilege’ of earning a living. I am very pleased that it will end for the majority of these taxpayers.”
The professional privilege tax was implemented in 1992 at $200, but was increased to $400 in 2002. Action on the legislation comes after a 2016 Tenne
ssee Advisory Commission on Intergovernmental Relations (TACIR) report stated that some professions in the state that are not taxed have higher average incomes. The report also noted that incomes of professionals vary significantly within the taxed professions and those in occupations earning lower salaries, pay the same amount as those earning more. Professionals in these areas must pay the tax annually even when they conduct no business. Tennessee is one of only six states that impose a professional privilege tax.
“I’m very proud of our Republican house colleges and this 111th Tennessee General Assembly. We’ve cut the professional privilege tax saving Tennessee taxpayers over $22 million. The tax on one’s occupation is unfair and unjust” said Rep. Mike Sparks (R-Smyrna).
The General Assembly reserved approximately $15 million for additional tax relief next year. Lawmakers want to offset a windfall of online sales tax revenue expected to be realized as a result of the U.S. Supreme Court’s Wayfair decision with additional tax relief. The decision allowed states to collect online sales taxes.
The $38.6 billion balanced budget proposes state government spending for the next fiscal year that begins July 1, 2019, and extends to June 30, 2020.