(The Center Square) — A Senate Ways, Means, and Finance subcommittee will get the first shot at legislation that would end Tennessee’s grocery taxes,

The bill by Democrats and Republicans have one key difference — funding.

Democrats were the first to introduce a bill that would eliminate the state portion of the food and food ingredient tax on July 1.

House Bill 2/Senate Bill 2, sponsored by Nashville Democrats Rep. Aftyn Behn and Sen. Charlene Oliver, proposes closing “corporate tax loopholes” to make up for the $700 million to $1 billion that could be returned from the state to taxpayers if the tax is removed. They cite a report by the Institute on Taxation and Economic Policy that said Tennessee could realize $891 million in annual revenue by requiring companies to report its worldwide revenue, not just what it earns in the states. Some states are already doing it, according to the report.

HB2/SB2 would also require the state to mitigate the loss to local governments.

Neither bill removes the 7% sales tax on prepared food, alcoholic beverages, candy, dietary supplements and tobacco.

The Republican bills from Rep. Elaine Davis of Knoxville and Sen. Bo Watson of Hixson would give local governments the authority to levy a grocery tax of up to 2.75% to make up for the loss from the state. The legislation has no mechanism for overcoming the millions lost in sales tax revenues.

The proposals come at a time when Tennessee has $77 billion in infrastructure needs over the next five years, according to a report from the Tennessee Advisory Commission on Intergovernmental Relations.

“Right now they are pulling up couch cushions to figure out how to pay for things and unfortunately it just feels like the grocery tax hasn’t been a priority of the governor or the Republican supermajority,” Behn told The Center Square in a phone interview.

Behn is no stranger to fighting for a food tax cut. She and Oliver filed the bills during the last legislative session, but they didn’t pass. Lawmakers did agree to a $1.6 billion franchise tax refund.

“It’s just a matter of where your priorities are,” Behn said. “For them it’s not about reforming our tax code to benefit working Tennessee families.”

House Majority Leader William Lamberth indicated in a December 2024 interview with WSMV that he would support the effort.

“The least we can do is try to take off the state portion of the grocery tax to try to make it a little easier on my friends and neighbors,” Lamberth told the television station.

The bills are on the subcommittee calendar but could get moved, a process called “rolling the bill,” in the Tennessee General Assembly.

But even if the General Assembly agrees to remove the sales tax on food, there is a question of whether or not Gov. Bill Lee would sign it. He did not mention it in his State of the State of Address.

“Thousands of bills have been filed in this session, and there’s still a long way to go in the legislative process,” a spokeswoman for Lee said in response to a question from The Center Square in February. “As with any legislation, the governor will review final bill language when it reaches his desk.”

Another bill on Tuesday’s calendar could give Tennesseans a partial break on groceries.

Sen. Raumesh Akbari, D-Nashville, is proposing removing the state sales tax only on frozen, canned or fresh fruits and vegetables. The bill would return $122 million to Tennessee taxpayers, according to the bill’s fiscal note. It was on the subcommittee’s calendar on March 11 but was moved to Tuesday.

Meanwhile, Tennessee’s neighbors are looking at ways to reduce food taxes.

Arkansas Gov. Sarah Huckabee Sanders, a Republican, announced in early March she was advocating for eliminating the tax, calling it “regressive” in a news release.

A bill that would have eliminated Mississippi’s 7% tax on food died. A bill that would lower the state’s income tax and also reduce the tax on food to 5% is still alive, according to the Mississippi Legislature’s website.

Alabama Lt. Gov. Will Ainsworth, a Republican, is advocating the reduction of Alabama’s 3% food tax.

“With bird flu raising the cost of large eggs to $5.00 a dozen – an all-time high – it’s time to continue removing the sales tax on groceries and provide needed relief to Alabama families,” Ainsworth said in a March 11 post on X.