This increase is due in part to the state elimination of the Hall Tax, an income tax created in 1929 that taxes interest paid on bonds and other investments. As part of Tennessee’s IMPROVE Act, the Hall Tax will be decreased by 1% annually until 2021, when it will be eliminated completely.
While the tax does not affect all homeowners in Davidson County, approximately 1,000 homeowners in the Belle Meade area pay some level of Hall Tax, according to the city of Belle Meade. Of that revenue, 37.5% goes to the local city in which it was paid, while the remaining 62.5% goes to the state.
According to budget documents from Belle Meade, Hall Tax revenue has historically made up at least half of city revenue, meaning in the future, the city will either have to raise taxes again or decrease expenses to avoid a deficit.
“Losing the Hall Tax is a loss no matter how you look at it,” Belle Meade Mayor James Hunt said during budget talks this summer. “We cannot recur that loss through any other normal means other than raising property taxes.”