By Sheila Burke
A transportation infrastructure bill that passed this year in the General Assembly also will provide property tax relief for some people, make groceries cheaper and offer other opportunities for economic growth.
The IMPROVE (Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy) Act was pushed by Gov. Bill Haslam (R) as a way to fund a $10 billion backlog of transportation projects.
It was a hard-fought battle in the General Assembly, which raised taxes on gasoline and diesel fuel to pay for road projects in all 95 counties. But the law eventually will also offer roughly $500 million in tax cuts annually.
Since July, consumers have been paying an additional 4 cents per gallon, bringing the gasoline tax to 24 cents. That additional tax will increase to 6 cents over the next two years but will go no higher after 2019. The tax on diesel will go up by 10 cents over that same period.
The idea of taxing gasoline purchases is to ensure that those who drive the most will be paying more for road construction, Haslam said.
During a recent AARP tele-town hall meeting, Haslam said the legislation was necessary because the fuel taxes that pay for building and maintaining roads and bridges haven’t changed in nearly 30 years—since 1989 for gas and 1990 for diesel. Yet almost all of today’s cars are more fuel efficient, so the state is taking in less money each year for road projects.
At the same time, the state has a budget surplus, primarily from sales tax revenues. So it was a good idea, Haslam said, to give some of that money back to citizens in the form of tax relief.
Needy get benefits
“The net effect is the largest tax decrease in the history of the state, and so our citizens are going to come out way ahead,” the governor said. “We’re actually getting a tax decrease net, and we’re getting all of these road projects done.”
As a result of the law, the tax on groceries went down from 5 percent to 4 percent this year. The IMPROVE Act also provides property tax relief to low-income seniors, disabled homeowners, and some disabled military veterans and their surviving spouses.
AARP Tennessee pushed for these tax breaks to be added. “We really wanted to make sure that the very neediest Tennesseans had a pretty decent benefit,” said Shelley Courington, AARP Tennessee advocacy director.
Under the law, low-income people 65 or older and disabled adults of any age with a household income of $29,180 or less get a break on property taxes. And the income threshold will increase with inflation.
The law provides that this year the property tax will be paid in full on the first $27,000 of the appraised value of someone’s house, said Rodney Archer, executive director of the County Officials Association of Tennessee.
The owner of a $100,000 home in Anderson County, for example, would get a tax break of $178, he said. Some people will be entitled to a break on both their county and city taxes.
That’s why, Archer said, it’s important for residents to check with their county trustee office—even if they think they make too much money—to see if they’re entitled to any property tax break.
Permanently and totally disabled veterans or their surviving spouses get a refund on property taxes for up to $175,000 of the assessed value of their homes.
State officials encourage homeowners to check with any of the Tennessee Department of Veterans Services offices to see if they qualify for relief.
Sheila Burke is a writer living in Nashville.