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



Sidewalks – Prioritizing sidewalks within the Parental Responsibility Zone (PRZ) will support neighborhoods and nearly half of the schools in the city.  

Parks – Parks are one of the most popular amenities for residents in our city and updates are a continuous need. This plan prioritizes specific parks in each City Council District and for things like updated play equipment and other amenities. 

Greenways – Knoxville’s greenway system is a great opportunity for connectivity with parks, different parts of town and outdoor recreation across our community. Yet, there are missing sections and the ongoing need for repairs. 

Facilities – From Fire Halls to Rec Centers to Chilhowee Park, the many facilities across our community regularly need repairs and updates. Taking care of our existing infrastructure is much more economical than being forced into building new. 

Road Paving – The Neighborhood Investment Plan will add 75 additional miles of road paving over the next five years (approx. 15 annually). 

Neighborhood Traffic Calming & Safety Projects

Affordable Housing  – This investment will result in an estimated additional 1000 Affordable Homes over the next five years and is in addition to the $5M that has been committed to annually. Anticipated housing will cover: 

• Commercial corridor redevelopment – estimated 500 homes
• Affordable housing gap financing including NOAH estimated 325 homes*
• Permanent Supportive Housing for chronically homeless – estimated 100 homes
• Senior Housing – estimated 75 homes
• Continued support for the Office of Housing Stability strategic plan implementation

*The City has a program that has proven success by garnering more than 2600 new affordable homes in the last five years. For every $1 of public money invested, $15 has been invested from the private sector - All for affordable housing!




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 proposed carving out food and food ingredients from the new ½ cent tax. City Council agreed and passed an ordinance that exempts groceries. 




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

The State of Tennessee defines groceries as food and ingredients for home consumption.
Food from restaurants is not considered groceries. 
Groceries include:

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

A detailed list of food and food ingredient items from the State of Tennessee can be found on pages 211-212 of this document.




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.




What is the question that will be on the ballot?

Shall the two and one-quarter percent (2.25%) local option sales tax rate currently levied throughout Knox County be increased to two and three-quarters percent (2.75%) in the City of Knoxville?

For ____

Against ____

While this wording may seem a little awkward, it meets the State of TN and City of Knoxville charter requirements. The For or Against language is a requirement. 




What does this mean for a family’s budget or bottom line?

A half cent increase means an additional nickel on a $10 purchase. We carved out groceries specifically to avoid any undue impact on struggling neighbors.  Also, this half cent increase in sales tax will not impact rent, gas, health care, utilities, and other expenses that make up a lot of a household budget. It's not a huge change for any single person, but with so many people shopping in Knoxville, it can generate significant funds to protect our neighborhoods. 




Why is the City doing this now?

Knoxville is growing and so are the needs in our community. Mayor Kincannon wants to be sure our city has a strong foundation and can continue to move forward for the future. Several previous mayors considered the addition of the ½ cent Local Option Sales Tax. With the current growth rate of our community and increased visitors both putting a strain on our infrastructure, now is the time to act. These neighborhood needs are essential to maintaining our quality of life.

The City’s projected population growth by 2040 is demonstrated in the chart below and at this link on the Knoxville-Knox County Planning webpage. Approximately 60,000-75,000 new people will live in our community in the next 15 years. Making this commitment to our neighborhood infrastructure now, is essential to manage growth sustainably and with a commitment to Knoxville’s future.
 





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)




Will Local Option Sales Tax be used for salaries for City employees? If not, why?

Because local option sales tax revenue can fluctuate with economic conditions and consumer spending, it is not always a consistent amount of funding. Therefore, it is not ideal to fund ongoing expenses like salaries, which require consistent, long-term financial support.




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 and geographic authorities for the City and County. This ½ cent local option sales tax will appear on the ballot in November 2025 for City residents to vote on and if it passes, will only apply to purchased in the City. It is possible that Knox County could join in this increase in Local Option Sales Tax at some point in the future.




How can City residents be assured that this extra revenue is being spent as indicated by the City?

1. The City will have a Project tracker available on the website to help residents know the status of the projects in the Neighborhood Investment Plan.

2. Vice Mayor Smith and City Council passed a resolution in support of the Neighborhood Investment Plan and have asked that Mayor Kincannon provide the details publicly as available. 

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

The City remains committed to supporting public education. The City currently allocates $172m to Knox County Schools annually, $53m more than the minimum required by state law. The proposed half cent increase would in no way diminish the city's robust commitment to our public schools.




How long will this 2.75% increase in Local Option Sales Tax be in effect?

We believe it is important not to sunset this tax. It plays a vital role in funding the necessary infrastructure improvements that directly impact our daily lives. The tax stays right here in our community, helping us invest in things that matter most to Knoxville residents. Ending the tax would mean losing a reliable source of local funding. By keeping the local option sales tax in place, we’re making sure Knoxville can continue to grow responsibly, maintain quality infrastructure, and plan for the future with confidence.  **No other cities, except one, has a sunset clause on their local option.** 

---