Repeal of Tennessee Gift and Inheritance Tax Official

Yesterday evening, Governor Haslam signed into law two bills that were recently voted on by the state legislature.  The new law repeals the state gift tax (effective 1/1/12) and the state inheritance tax (gradual phase out until repeal in 2016).  This marks a significant change in Tennessee’s tax landscape.  Without a true income tax, and now without gift and inheritance taxes, Tennessee will likely be viewed as one of the most taxpayer-friendly states of the nation.

Applicable Federal Rates for June

The AFR rates for short-, mid-, and long-term notes fell in June by a few hundredths of a percentage point. You can find all the applicable AFR rates for June here.

Updates on Tennessee Tax Changes

As an update for anyone patiently awaiting the final passage of bills repealing the Tennessee inheritance and gift taxes, the inheritance tax bill (SB 3762) was transmitted to the Governor for signature today.  The gift tax bill (SB 2777) was recently signed by the Speaker and should be transmitted to the Governor within the next few days.  It is highly unlikely that either of these bills will not be signed by Governor Haslam.

Gift and Inheritance Tax Changes Currently Being Engrossed

The House and Senate engrossing offices are hard at work drafting final versions of the bills that were recently approved by the Tennessee legislature to repeal both the inheritance and gift taxes.  At present, all indications point to successful passage within the next few days, as the likelihood of a veto by Governor Haslam is very small. 

While the inheritance tax will not be phased out completely until 2016, Tennessee’s gift tax repeal is poised to become effective as of January 1, 2012.  If you have been wanting to make gifts to take advantage of the current federal exemptions, but have been wary of incurring the corresponding Tennessee gift tax, your opportunity may be on the horizon.

TN Inheritance Tax Bill Moves Past Another Hurdle

Yesterday, the Senate Finance, Ways & Means Committee unanimously voted to approve a bill that would repeal the Tennessee inheritance tax beginning in 2016.  The bill will now be placed on the Senate’s calendar for consideration of the full Senate. At this time, no date has been set.

 

UPDATE: The bill has been passed by the Senate and the amendment will be sent to the house for approval.  Assuming the House approves, this bill will then go to Gov. Haslam for signature.  Great news!

On a related note, the legislature has also voted to repeal the state’s gift tax – effective January 1, 2012.  Therefore, if you were unsure about taking advantage of the favorable gift tax laws due to the potential for Tennessee taxation, you may have just received an early Christmas present.

No New Updates on the Inheritance Tax Front

As regular readers are aware, I have been closely monitoring the state legislature’s push to repeal the Tennessee inheritance tax. 

For those unfamiliar with the matter, the state House voted to repeal the inheritance tax (beginning 2016) on April 12, 2012.  Following the House’s vote, the bill was sent to the Senate Finance, Ways, and Means Committee (SFW&M Committee) for consideration.  The  SFW&M Committee was scheduled to vote on the bill on April 17th.  Since mid-April, voting has been deferred three times.  Currently, the bill is scheduled to be voted upon tomorrow, April 24, 2012.  If the bill is passed, it will likely go to the Senate for vote. 

I will keep everyone updated as new developments arise.

UPDATE: Deferred again to April 25, 2012.

Bill to Repeal TN Inheritance Tax Passes House

Yesterday, the Tennessee House of Representatives, by a vote of 88 to 8, passed HB 3760.  This bill would repeal Tennessee’s inheritance tax beginning in 2016.  The bill has yet to be approved by the Senate.  At present, it is being considered by the Finance Ways and Means Committee.