Tennessee state budget $418.2M above estimates for July 2026

Tennessee revenues exceeded budgeted estimates for the month of July with Department of Finance and Administration Commissioner Jim Bryson reporting total July tax revenues were $2.2 billion, $418.2 million more than the budgeted estimate and $337.8 million more than July 2025.  

The total tax growth rate for the month was 18.39%. General fund revenues were $404.8 million more than the July estimate, while the four other funds that share in state tax revenues were $13.4 million more than the estimates. 

On an accrual basis, July is the final month in the 2025-2026 fiscal year. Final reported revenues will be subject to accrual accounting adjustments that may increase or decrease the recorded cash amounts on an audited basis. 

“July delivered a strong revenue performance,” Bryson said. “Better-than-expected sales tax growth, reflecting strong June consumer activity, and significant franchise and excise tax collections, drove higher revenue collections. Other taxes were near or above expectations. Tennessee will close fiscal year 2025-2026 significantly ahead of expectations, primarily due to a 13% revenue growth in the fourth quarter. While we are pleased to finish the fiscal year on such a strong note, it is important to remain cautious for the future. Some growth resulted from inflation, and F&E taxes vary significantly month to month. These corporate estimated payments may require adjustments once final tax liabilities are assessed. Therefore, we will continue to closely monitor economic conditions and manage the state’s finances responsibly." 

On a year-to-date basis, August through July, total tax revenues are 5.24% greater than the budget estimate, or $1.2 billion above expectations. When compared to this same period last year, total tax revenues have grown 7.65% or $1.7 billion. 

General fund revenues are 5.91% greater than the year-to-date budgeted estimate, or $1.1 billion higher. Likewise, general fund collections compared to this same period last year have increased 7.65% or $1.4 billion. 

Individual tax performance compared to July 2026 Budgeted Estimates: 

• Sales Taxes: Above estimate by 5.28% or $69.2 million 
• Corporate Taxes (Franchise & Excise): Above estimate by 286.94% or $335.8 million 
• Fuel Taxes: Above estimates by 4.08% or $4.5 million 
• All other taxes: Above estimate by 3.93% or $8.6 million 

Year-to-date performance compared to Budgeted Estimates: 

• Sales Taxes: Above estimate by 2.13% or $320.3 million 
• Corporate Taxes (Franchise & Excise): Above estimate by 19.29% or $757.0 million 
• Fuel Taxes: Below estimates by 0.11% or $1.5 million 
• All other taxes: Above estimate by 4.51% or $106.6 million 

Individual tax performance compared to July 2025: 

• Sales Taxes: Up 8.52% or $108.3 million 
• Corporate Taxes (Franchise & Excise): Up 82.64% or $204.9 million 
• Fuel Taxes: Up 5.92% or $6.4 million 
• All other taxes: Up 8.68% or $18.1 million 

Individual tax performance compared to August 2024 through July 2025: 

• Sales Taxes: Up 4.57% or $670.0 million 
• Corporate Taxes (Franchise & Excise): Up 22.09% or $846.7 million 
• Fuel Taxes: Down 0.01% or $0.1 million 
• All other taxes: Up 7.53% or $172.8 million 

The budgeted revenue estimates for 2025–2026 are based on the State Funding Board’s consensus recommendation from Nov 25, 2024, which was adopted by the first session of the 114th General Assembly in May 2025. These estimates also incorporate any revenue changes enacted during the 2025 General Assembly session. Monthly estimates for fiscal year 2025–2026 are available on the state’s website. 

On Nov. 24, 2025, the State Funding Board reconvened and recommended updated revenue projections for the 2025–2026 fiscal year. The Board adopted revised growth ranges of 1.59% to 2.04% for total taxes and 0.72% to 1.32% for general fund revenues. Both the Board’s upper-limit projection and the growth assumptions outlined in Governor Lee’s budget proposal for the second session of the 114th General Assembly reflect no changes to the Department of Revenue’s original state tax revenue estimates for the 2025–2026 fiscal year. 

On May 16, 2026, during the second session of the 114th General Assembly, the Legislature passed the 2026–2027 budget, incorporating the revised revenue ranges recommended by both the Governor and the Funding Board. The appropriations bill, PC 1142, was signed into law by the Governor on May 22, 2026.