Tennessee's Senate Transportation and Safety Committee on Wednesday signed off on Senate Bill 1642, a proposal that would redirect most state sales and use tax revenue from motor vehicle and tire sales into the highway fund. The bill, sponsored by Sen. Page Walley, cleared the panel and now heads to the Senate Finance, Ways and Means Committee. Supporters say the change is meant to create more predictable money for pavement, bridges and routine maintenance.
SB1642 would require that 95.3970 percent of sales and use tax revenue generated from the sale of new or used motor vehicles and tires be deposited in the highway fund, with the remaining 4.6030 percent allocated to incorporated municipalities, according to the Tennessee General Assembly. The legislative record shows the Transportation and Safety Committee recommended the bill for passage on Feb. 18, 2026, on a 9-0 vote. The measure also directs TDOT to study long-range infrastructure needs and report its findings to lawmakers by Jan. 1, 2028.
Why lawmakers say the change matters
State leaders have argued that traditional highway revenue, especially fuel taxes, has flattened while project costs rise, leaving a large backlog of work to be done, as previously reported by the AP. Local reporting noted the committee moved the measure just ahead of the Tennessee Department of Transportation's scheduled budget appearance this week, which will lay out TDOT's project needs and funding requests, WBIR reported. Supporters have framed SB1642 as a way to lock in recurring dollars without adding debt.
Fiscal note: how much it moves
The bill's fiscal analysis estimates the change would net roughly $805.9 million to the highway fund in the 2026-27 partial year and about $1.074 billion in subsequent years while reducing the General Fund by similar amounts, according to the bill's fiscal note. The Tennessee General Assembly shows the measure would also create a modest, mandatory monthly distribution to municipalities.
What the money could pay for
Local reporting on the package around the budget process says TDOT and lawmakers are eyeing a mix of one-time and recurring spending: roughly $75 million for road maintenance, a one-time $50 million boost for maintenance, $150 million for critical bridge repair, $165 million for welcome centers and rest areas, $56 million for air-travel infrastructure and other targeted investments, WBIR reported. TDOT officials have warned that equipment and materials costs have jumped and, as TDOT's Natalie Krysztof put it to local reporters, "without the one-time general funds, revenue is flat and not going anywhere."
Municipal share and next steps
Under the proposal, municipalities would receive the remaining 4.603 percent of the motor-vehicle and tire sales tax collections, distributed monthly in proportion to population, and the fiscal summary estimates roughly $3.3 million to local governments in the bill's first partial year. With the committee recommendation in hand, SB1642 now moves to the Senate Finance, Ways and Means Committee, where lawmakers will weigh the fiscal tradeoffs as TDOT lays out its full budget request.
