Tennessee encourages safe gun practices with sales tax holiday for gun safes
Gun safes and gun safety devices will be exempt from Tennessee sales and use tax for one year, from July 1, 2021, through June 30, 2022. This is the first time Tennessee has provided an exemption for gun safes and gun safety devices, though the Volunteer State has attempted to exempt guns and ammunition in the past.
The temporary (if lengthy) exemption period in Tennessee is due to the enactment of Senate Bill 551. Initially, the bill’s sponsors sought to carve out a permanent sales tax exemption for guns and gun safety devices. However, as signed into law, the amended bill makes clear this is a “sales tax holiday.” And as with all holidays, the exemption period will come to an end.
Can a sales tax exemption help reduce accidental deaths?
Senator Sara Kyle, the bill’s primary sponsor, has been working to make gun safety equipment less expensive since at least early 2018. At the time, then Senate Minority Leader Lee Harris pointed out that in 2017, “Memphis led the entire nation in negligent storage shootings.” Harris, Kyle, and several other lawmakers hoped exempting gun safety devices from sales tax, even temporarily, would reduce the number of accidental shootings and gun thefts in the state.
Whether the new temporary tax-free period for gun safes and gun safety devices can achieve that lofty goal remains to be seen. We should know more in a year.
State sales tax revenue will likely drop by approximately $321,300 as a result of the temporary exemption, per the bill’s fiscal note. Local tax revenue could decrease by approximately $131,100. These estimates are based on a state sales tax rate of 7%, an average local option sales tax rate of 2.5%, and an estimated $5 million in taxable sales of gun safes and safety devices per year.
Of course, these are guesstimates. The “annual average number of gun safe sales and safety devices” is unknown and retail prices for these products vary widely, from $100 to more than $10,000. According to the fiscal note, “The Department of Revenue cannot segregate tax collection data to show sales tax collections received solely due to gun safe and gun safety device sales.” The fiscal impact will be more clearly understood after the conclusion of the exemption period in 2022
States where gun safes are exempt from sales tax
Gun safes are always exempt from sales tax in the following states:
Several other states have sought to exempt gun safes in the past, including Maryland, Michigan, and West Virginia. Those efforts failed. During the 2021 legislative session, Rhode Island unsuccessfully tried to exempt gun safes with House Bill 5786. Yet Texas Senate Bill 313, which would exempt firearm safety equipment, is still alive; it was delivered to the governor on June 1.
States where guns are exempt from sales tax
Mississippi provides an annual Second Amendment tax-free period each August. During the three-day tax-free period, ammunition, firearms, and certain hunting supplies are exempt from both state and local sales tax, as is the following safety equipment:
- Gun safes
- Safety equipment that’s mounted or affixed to a bow or firearm
- Safety gear
Louisiana’s annual Second Amendment sales tax holiday is on hiatus until 2025, but qualifying sales of ammunition, firearms, and hunting supplies may be exempt from local sales tax in some parts of the state, September 3–5, 2021. Gun safes generally aren’t eligible for the exemption.
As noted above, Tennessee lawmakers have been unable to get a Second Amendment sales tax holiday bill to the governor’s desk. And a proposed Second Amendment sales tax holiday in Arkansas failed to gain traction in 2017.
Whether a state chooses to exempt guns or gun safes is largely political, as is most tax policy. The Democratic-majority states of California and Washington are unlikely to provide an exemption for guns, and both Los Angeles and Seattle impose a special tax on firearms and ammunition. By contrast, proposals for Second Amendment sales tax holidays tend to surface in the more Republican states of the South.
But the United States is a vast and complex nation. There are gun enthusiasts up and down the blue west coast, and lawmakers in Tennessee managed to establish a sales tax holiday for gun safes, not guns. In short, sales tax is full of unexpected surprises — and businesses need to keep up with them.
Learn more about 2021 sales tax holidays.
The 2021 sales tax changes report: midyear update
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