More details can be found on these pages:





What projects will get funding from the money raised from the Local Option Sales Tax increase?

A list of specific projects by City Council district is in the works and will be available in the coming weeks.






What is a Local Option Sales Tax?

While the State of Tennessee has no income tax, the state does charge 7% sales tax across the entire state. Local municipalities are allowed to charge up to 2.75% additional local option sales tax. Knoxville is currently at 2.25% with a proposed increase of ½ cent, to maximize the allowable amount of 2.75%

Local Option Sales Tax only applies to the first $1600 of each purchased good/service. However, the State of Tennessee portion applies to the entire amount. 

A change in the Local Option Sales Tax requires a majority vote on a city-wide ballot.




When is the last time Knoxville increased its Local Option Sales Tax?

The City of Knoxville last changed its Local Option Sales Tax in 1988. That change to our current rate of 9.25% went countywide in 1989.




Will my groceries be taxed more?

No.

Groceries are often a significant expense for families, therefore, Mayor Kincannon has carved out groceries from this new portion of the new Local Option Sales Tax.




What is defined as a grocery in the State of Tennessee?

Groceries include:

• Raw meats, produce, dairy products
• Packaged snacks, beverages, frozen foods
• Baking ingredients, condiments, spices
• Prepackaged non-alcoholic beverages

Remember, baby formula, diapers, and wipes are already exempt from sales tax in Tennessee.

Retailers are required to report sales in different categories and automatically categorize “groceries,” differently from other items such as toilet paper. Since these categories already exist, the difference in sales tax will be automatically applied separately to those items.




How do visitors to Knoxville contribute to the Local Option Sales Tax?

Everyone who spends money in Knoxville – including tourists, regional visitors, and those shopping here but living elsewhere. Knoxville is a regional hub drawing from a number of surrounding counties for shopping, restaurants, healthcare, and cultural, and entertainment events.

	Example of How Visitors Contribute to Local Option Sales Tax
	Megan Moroney recently sold out two concerts in April at the Knoxville Civic Auditorium & Coliseum • Tickets sold to individuals outside of the state of Tennessee – 7307 • Tickets sold to individuals inside the state of Tennessee – 2572 • Total Tickets sold – 9879 74% of attendees were from out of state and contributed to Local Option Sales Tax with their purchase of tickets, Megan swag, concessions at the show, some likely stayed in hotels and ate out at restaurants.

Additionally, Knoxville has a healthy tourist economy, ranking 4th in the state, and is a destination for visitors from around the country and world.

While people are enjoying our rich outdoor amenities, our festivals, sporting events or other attractions, they are spending money and paying Local Option Sales Tax on items purchased.

Property tax is paid by local property owners. But Local Option Sales Tax is paid not only by local residents, but by visitors as well. It is a path for everyone, locals and visitors, to participate in supporting the key infrastructure and amenities that make Knoxville a great place to live, work, play, and visit.




Why is the City doing this now?

Knoxville is growing and so are the needs in our community. Mayor Kincannon wants to be sure the next mayor and council have a strong foundation to continue to move our city forward for the future. Several previous mayors considered the addition of the ½ cent Local Option Sales Tax, but the current growth rate of our community has led greatly to this decision to do this now.




What other Tennessee communities have 2.75% Local Option Sales Tax?

The majority of communities in the State of Tennessee already have a 2.75% Local Option Sales Tax.

A total of 62% of Tennessee counties have 2.75% local option sales tax - click here for more details. 

Neighboring Communities: 
• Anderson (enacted in 2006)
• Jefferson (enacted in 2008)
• Sevier (enacted in 2009)
• Blount (enacted in 2014)
• Grainger (enacted in 1994)




What will NOT be impacted by this ½ cent Local Option Sales Tax increase?

• Gas/Diesel – Has a separate tax
• Groceries – Mayor asking to exclude
• Prescription Medication – All types
• Utilities – Like from KUB or LCUB
• Bus Fare – No increase from KAT or CAC
• Property Tax or Rent – No impact from sales tax
• Healthcare Visits – Including medical, vision, dental, therapy




Is this Local Option Sales Tax increase just in the City of Knoxville or is it in all of Knox County?

There are separate governments for the City and County. Mayor Kincannon and City Council only have jurisdiction over the City. It is possible that Knox County could join in this increase in Local Option Sales Tax at some point in the future.




What is the City's current revenue from Local Option Sales Tax? And how is it shared?

In the 2024 fiscal year, the Local Option Sales Tax generated $66 million to fund City operations.

The City provides 72 percent of its current Local Option Sales Tax revenues to support Knox County's public schools. In FY 2024, that amounted to more than $171 million going to improve public education.

State law requires that 50 percent go to schools, which would have amounted to about $118 million last fiscal year. By Knoxville voluntarily bumping up its support from 50 percent to 72 percent, that's an additional $53 million last year that went to support schools.




How would the proposed increase affect the City's support of Knox County Schools?

The City remains committed to supporting public education. The 1/2 cent proposal would NOT lessen the City's financial backing ($171.7 million last year) of Knox County Schools.

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