1. Taxes PowerPoint Notes: Part 3

2. Sales Tax  This is the tax added onto the price of goods and services.  Tennessee has a state sales tax.  The state sales tax in Tennessee is 6% on food and food ingredients and 7% on nearly everything else.  Prescription medicines are an example of an item that is not subject to the sales tax.

3. Sales Tax (Continued)  Oak Ridge also charges a sales tax of 2.75%.  This brings the total sales tax in Oak Ridge to 8.75% on food and food ingredients and 9.75% on nearly everything else.  Knoxville charges a sales tax of 2.25%.  Knoxville’s sales tax is 8.25% on food and food ingredients and 9.25% on nearly everything else.

4. Sales Tax (Continued)  Sales tax is an example of a regressive tax.  This means that the tax has a greater impact upon lower income individuals than higher income individuals.

5. Excise Tax  A federal and/or state tax imposed on the manufacture and distribution of certain consumer products.  An example of this is the tax on gasoline.  The state of Tennessee imposes a tax of 21.4 cents per gallon.  The federal government imposes a tax of 18.4 cents per gallon (24.4 cents per gallon for diesel).  There is a total tax of 39.8 cents per gallon of gas.  This tax is built into the price per gallon of gasoline.

6. Property Tax  This is the tax that an owner is required to pay on the assessed (appraised) value of their property (land, buildings, and homes).  Registration fees on boats and vehicles are a type of tax on your personal property.

7. Property Tax (Continued)  Property taxes are typically the biggest source of revenue for local governments.  Property taxes are typically the biggest source of revenue for local governments.  They are not imposed by states but by the tens of thousands of cities, townships, counties, school districts and other assessing jurisdictions throughout the United States.

8. Property Tax (Continued)  The median property tax in Tennessee in 2008 was $924.00.  Property taxes differ in Oak Ridge based upon whether your home or business is located in Anderson County or Roane County.  Oak Ridge (AC) $5.33 per $1000 in assessed value*  Oak Ridge (RC) $4.92 per $1000 in assessed value*  *This information was provided by Oak Ridge City Council Member Ellen Smith’s website.

9. Estate Taxes  A tax levied on an individual's estate or valuables if they exceed a certain amount. That amount currently is $3,500,000. $3,500,000.  There is currently legislation to reduce this exemption amount to $1,000,000.  This tax does not apply between spouses, who can leave any amount to one another upon death--a right known as the unlimited marital deduction. Therefore, the estate tax is mostly imposed on assets left to heirs.  Property in excess of the exemption amount is taxed at a rate of 45%.

10. Gift Tax  There is an annual limit on the amount of money that can be given to an individual as a gift.  The current limit is $13,000 per recipient per year.  Any gift in excess of this amount reduces the amount exempted from estate taxes.  Monetary gifts to cover educational expenses or medical bills do not count toward the gift tax limit.