Gov. Lee signs law to cut administrative fees and boost local government revenues
Gov. Bill Lee has signed into law a new measure that will deliver nearly $19 million in annual savings to local governments across Tennessee by reducing administrative fees on locally collected taxes.
Senate Bill 1315, sponsored by Senate Majority Leader Jack Johnson (R-Franklin) and Sen. Ken Yager (R-Kingston), reduces the Department of Revenue’s administrative fee on several local taxes from 1.125% to 0.75%. This 33% reduction in the fee applies to the local option sales tax, local occupancy tax, business tax, coal severance tax, and local tax surcharge.
“This legislation is a win for Tennessee’s cities and counties,” said Sen. Ken Yager, who served as Roane County Executive for over 20 years. “Local governments work hard to provide services with limited resources, and this law ensures they get to keep more of the revenue they generate. I’m grateful to Governor Lee for signing this important legislation and to my colleagues for their support.”
By lowering the administrative fee, counties and municipalities across the state will retain more of their locally generated revenue—amounting to an estimated $18.9 million annually. The additional funding will help local governments improve essential services, balance budgets, and operate more efficiently without raising taxes.
The bill also makes a technical change by removing subsection (h) of Tennessee Code Annotated Section 67-6-710, which is related to the local option sales tax, thereby simplifying the administration of this provision in line with the revised fee structure. Furthermore, the legislation ensures consistency across all applicable tax statutes by applying the same reduced collection fee rate.
Set to take effect on July 1, 2025, this law will apply to all tax collections received on or after that date. The legislation reflects a commitment to reducing state-imposed administrative costs on local governments and empowering municipalities and counties to retain more of their locally generated revenue.