On May 20, 2016, Tennessee Gov. Bill Haslam signed into law Senate Bill (SB) 47, which phases out the Hall income tax (Hall tax). The Hall tax is a 6 percent income tax imposed on dividends and interest received by Tennessee residents, including individuals, trusts, and business entities.
As enacted, SB 47 reduces the Hall tax to 5 percent for tax years beginning in 2016 and completely repeals the tax beginning in 2022. The bill also states that it is the legislative intent that the Tennessee General Assembly will pass legislation to reduce the tax by 1 percent annually beginning with its next annual session, which commences in January 2017. While the bill provides for an annual 1 percent reduction until the tax is completely eliminated, the annual reductions are not a certainty until they are enacted.