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State-Shared Income Tax (Hall Income Tax)

Reference Number: MTAS-1876
Reviewed Date: 12/20/2021

Revenue Class: Intergovernmental Revenue

Fund: General

Account No.: 33520

Description: State taxes levied on the earnings of stock dividends and interest on bonds earned by individuals, partnerships, associations, trusts and corporations. The municipality’s share depends upon the residence of taxpayers; i.e., if he/she resides within the corporate limits of the municipality.NOTE: this tax has been fully repealed effective January 1, 2021; therefore no new taxes should be realized from 2021 forward.

Authorization: T.C.A. § 67-2-101 et seq.

Requirements or Restrictions: N/A

Current Rate: The "IMPROVE Act" which passed in April of 2017 included a phaseout over the next five years, as follows:

  • 4% for tax years beginning January 1, 2017
  • 3% for tax years beginning January 1, 2018
  • 2% for tax years beginning January 1, 2019
  • 1% for tax years beginning January 1, 2020
  • Repeal beginning January 1, 2021

Frequency of Payment: Annually on or on or before the fifteenth day of the fourth month commencing after the end of the taxpayer's tax year. Armed forces personnel have 180 days in which to file in certain circumstances.

Late Pay Penalty: N/A

Exemptions: Exemptions are listed in T.C.A. § 67-2-104. The most common exemptions include the first $1,250 of an individual’s return and the first $2,500 of income for a joint return; people 65 or older whose income is not more than $37,000 ($68,000/couple); blind people; pension trusts; profit-sharing trusts; and all income derived from government bonds and securities.

Collection: State forwards municipalities’ share annually.

Use Restrictions: None.