Mixed Drink Tax (Liquor-by-the-Drink Tax)

Reference Number: 
CTAS-1627

Authority.  T.C.A. §§ 57-4-301 through 57-4-308.

Description.  Two related taxes are considered together under this topic. Both taxes are on the privilege of selling alcoholic beverages at retail in this state for consumption on the premises. The first tax is an annual fixed amount based on the type and size of the business; the second tax is a percentage levy fifteen percent (15%) based on the sales price of alcoholic beverages sold for consumption on the premises.  T.C.A. § 57-4-301.

Distribution.  These two taxes are distributed as follows:

  1. The fixed annual tax goes to the state general fund for state purposes.  T.C.A. § 57-4-301.
  2. The gross receipts tax is distributed in accordance with T.C.A. § 57-4-306 as follows:

a.  Fifty percent (50%) to the state general fund to be earmarked for educational purposes.

b.  Fifty percent (50%) to local political subdivisions:

(1)  Fifty percent (50%) for education, in accordance with the statutory formula.

(2)  Fifty percent (50%) divided as follows:

(a)  Collections in unincorporated areas, to the county general fund.

(b)   Collections in municipalities, to those municipalities.

Special provisions apply in Sevier, Hamilton, and Bradley counties.