The income tax that wasn’t a traditional income tax is gone, but why hasn’t Tennessee eliminated the grocery tax? Plus the local news for October 20, 2025 and kids in solitary confinement.
Below is a partial transcript of the episode:
It’s October 20, 2025.
On this day in 1797, Tennessee’s brand new General Assembly landed on a unique response to complaints about certain wild animals. Each county was allowed to levy a tax that would be paid in the form of the scalps of squirrels or crows. In the exchange rate of animals, one crow was worth the same as two squirrels. Those who did not pay up by proving they’d killed their share of the nuisance animals could be charged a penny for each skin they were short.
The tax “payments,” once collected, were to be incinerated.
The county courts were authorized to pay up to $2 for wolf hides, as well, although that was more of a bonus than a requirement.
The days when Tennessee communities could combine animal control with taxation are long gone, but levying money in order to facilitate government services is of course still very much a thing.
Although, for quite a while now, the name of the game on the state level in Tennessee has been tax cuts. One of the big selling points leaders try to make when attempting to lure businesses to the state is the idea that this is a low-taxation state. They love to point out that we don’t have an income tax. Although, for a long time when they said that, it was kind of a technicality.
For almost 100 years, Tennessee taxed one particular type of income: the interest earned on stocks and bonds. There were a bunch of exemptions, so the average retirement account wasn’t getting pinged, but a lot of the more well-to-do people in the state felt the pinch. It was called the Hall Income Tax, and it was established in 1929.
Now, that was an era for real change in the tax landscape. The federal government had been collecting income tax on and off since the Civil War, but the trend of states establishing their own really took off in the late teens, 20s and 30s. (I’m talking about the 20th century, of course). Basically, during Prohibition.
That wasn’t the only factor, but it’s no small thing that states suddenly couldn’t collect taxes on alcohol sales. At the time, making, distributing and selling wine, beer and liquor was the fifth largest industry in the nation. In fact, the federal shift towards the income tax was credited with that level of government being able to weather the financial storm when a previously reliable source of revenue became illegal. States needed to stay on an even keel, too, and so they had to figure out some other source of money.
But, of course, the solution most states found was to tax wages. Tennessee is one of only two (the other was New Hampshire) that opted to create levies on interest and dividend income, instead.
That tax stuck around for a long time, but about a decade ago, lawmakers decided to phase it out. It essentially ceased to exist in 2021.
And like I said, cutting taxes has been the overall trend in Tennessee for the last little while. Well, cutting taxes on businesses and high-income earners, anyway. There was the elimination of the Hall Income Tax, but also the massive changes to the way the state’s franchise tax is assessed and collected.
However, although it seems to be suggested every year, state leaders have not yet seen fit to eliminate the tax that hits every income bracket no matter what: the grocery tax. There have been grocery tax holidays some years, but most of the time, the state makes a little on every food purchase made in the state. And that’s unusual. Nationwide, only 13 states still tax groceries.
And this year, the legislature passed a measure to start collecting a new tax on a particularly fast-growing industry. As of July 1st, vapor products are now taxed at a rate of 10 percent.
That stands in direct contrast to another change to the tax code that was enacted around the same time: buying wine on site at a Tennessee winery is now exempt from the drink tax.
Credits:
This is a production of Nashville Public Radio
Host/producer: Nina Cardona
Editor: Mack Linebaugh
Additional support: Tony Gonzalez, Miriam Kramer, LaTonya Turner and the staff of WPLN and WNXP
On Air - 90.3 WPLN-FM