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The Tennessee Conservative [By Olivia Lupia] –
The Knoxville City Council approved Democrat Mayor Indya Kincannon‘s proposal to increase sales tax within city limits by half a percent, which will now leave the choice up to city voters in November.
The proposal initially presented an increase to the city sales tax from 2.25% to 2.75% with exemptions for groceries, but because of a 2024 Tennessee law, that exclusion may disappear should the increase pass.
Knoxville claims the increase will bolster revenue by $47 million per year for work on parks, greenways, roads, and affordable housing, and councilmembers also approved the exemption for the retail sale of food and food ingredients from the sales tax rate increase.
But according to the state statute, cities can only exempt groceries from sales taxes if the city’s sales tax rate remains lower than the county’s, and since Knox County will likely follow suit in raising their own sales tax rate based on historical precedent, groceries will no longer be exempt from the sales tax increase in Knoxville.
Even if Knox County decides not to take the Knoxville proposal for itself by the August 3 deadline, leaving the grocery exemption in place for city voters, they can adopt their own increase at any time and place it before Knox County voters which would still ultimately remove the city grocery tax exemption.
Knox County appears to have decent incentive to adopt their own increase since the move would fund Knox County Schools to the tune of millions as both the city and county are legally required to give most of their revenues to the school system so long as their tax rates are the same. Should the county rate remain below the city’s, the city will keep all extra revenue.
The City Council voted 7-1 to allow the measure to be placed on the ballot, and Mayor Kincannon called the proposal “empowering.”
“We are proposing to let City of Knoxville voters look at what the proposed investments are and decide whether they think it’s worth the half cent increase in the local option sales tax knowing at least 50% of that sales tax revenue is generated from people not living in the City of Knoxville. I think knowing that the burden is shared more broadly is pretty compelling,” she said.
The proposed increase will appear on the November 4 ballot for Knoxville voters and will take effect March 1, 2026, should it pass.
About the Author: Olivia Lupia is a political refugee from Colorado who now calls Tennessee home. A proud follower of Christ, she views all political happenings through a Biblical lens and aims to utilize her knowledge and experience to educate and equip others. Olivia is an outspoken conservative who has run for local office, managed campaigns, and been highly involved with state & local GOPs, state legislatures, and other grassroots organizations and movements. Olivia can be reached at olivia@tennesseeconservativenews.com.
