Hall Income Tax

Authority.  T.C.A. §§ 67-2-101 through 67-2-125.

Description.  This is a tax on income derived from stocks and bonds, as defined in T.C.A.  §§ 67-2-101 and 67-2-102.  There are numerous exemptions, including a $1,250 personal exemption on individual returns and $2,500 on joint returns.  T.C.A. § 67-2-104.  The tax is collected by the Department of Revenue.  The rate was previously five percent (5%) but is being phased out as follows:

(1) For any tax year that begins on or after January 1, 2017, and prior to January 1, 2018, four percent (4%);

(2) For any tax year that begins on or after January 1, 2018, and prior to January 1, 2019, three percent (3%);

(3) For any tax year that begins on or after January 1, 2019, and prior to January 1, 2020, two percent (2%);

(4) For any tax year that begins on or after January 1, 2020, and prior to January 1, 2021, one percent (1%); and

(5) For any tax year that begins on or after January 1, 2021, and for subsequent tax years, zero percent (0%);

Distribution.  The tax is distributed as follows:

1. Up to 10 percent of the first $200,000 of taxes collected and 5 percent of amounts over $200,000 go to the Department of Revenue for administration of the tax.  T.C.A. § 67-2-117.
2. The taxes collected on income from stocks and bonds after deducting administration expenses are distributed as follows:

a.  Five-eighths (5/8) to the state general fund;

b.  Three-eighths (3/8) to the counties and municipalities of the state.  If the taxpayer resides inside the corporate limits of a municipality, then to that municipality; but if the taxpayer resides outside any municipal limits, then to the county of the taxpayer's residence.  T.C.A. § 67-2-119.