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The Tennessee Constitution creates the Tennessee Property Tax. The Constitution requires that all property is subject to taxation except property which has been exempted. Generally, exempt properties consist of property owned by any government and used exclusively for public or corporate purposes; property held and used for purely religious, charitable, scientific, literary or educational purposes; direct products of the soil for the producer and the immediate vendee, and personal checking and savings accounts.
Although the Legislature has the direct power to tax property, Tennessee does not tax real estate or personal property. The Legislature instead has delegated the statutory power to tax property to the local cities, towns, and counties.
The Constitution has also delegated to the State the power to ascertain the value of each property in the manner as the State may determine is proper. However, the Constitution specifically provides a property classification system which requires types of properties to be assessed at different percentages of value.
To accomplish this classification system, the Constitution first divided all property into three (3) separate classes. These property classes are 1) REAL ESTATE, 2) TANGIBLE PERSONAL PROPERTY, and 3) INTANGIBLE PERSONAL PROPERTY. The Constitution then further mandates that each class of property shall be further divided into various subclasses and assessed at percentages of value as set forth.
| | | |
| Classes and Subclasses of Property | | Percentage |
| | | |
| 1. REAL ESTATE | | |
| Subclasses | | |
| a. Residential Property | | 25% |
| b. Commercial and Industrial Property | | 40% |
| c. Public Utility Property | | 55% |
| d. Farm Property | | 25% |
| | | |
| 2. TANGIBLE PERSONAL PROPERTY | | |
| Subclasses | | |
| a. Public Utility Property | | 55% |
| b. Commercial & Industrial | | 30% |
| c. All Other Tangible Personal Property | | |
| Except Household Furnishings | | 5% |
| | | |
| 3. INTANGIBLE PERSONAL PROPERTY | | Various |
The Legislature was delegated the power to determine the assessment percentages of value on intangible personal property
